Ex-Stanford Executive Gets 5 Years in $7B Swindle

January 23, 2013

The star prosecution witness in the trial of convicted Texas financier R. Allen Stanford was sentenced Tuesday to five years in prison for helping to bilk investors out of more than $7 billion in one of the biggest Ponzi schemes in U.S. history.

James M. Davis had faced up to 30 years in prison after pleading guilty in 2009 to three fraud and conspiracy charges as part of an agreement with prosecutors.

“I am ashamed and I’m embarrassed,” Davis said at the sentencing hearing at Houston federal court. “I’ve perverted what was right and I hurt thousands of investors. I betrayed their trust and also associates and neighbors and friends and my family.”

Prosecutors say Stanford persuaded investors to buy certificates of deposit from his Caribbean bank, then used that money to bankroll a string of failed businesses and his own lavish lifestyle, including a fleet of private jets and yachts.

At Stanford’s trial last year, Davis – the former chief financial officer of Stanford’s companies – portrayed his ex-boss as the leader of the fraud who burned through billions of CD deposits. He testified that he and Stanford faked the bank’s profits and fabricated documents to hide the fraud.

Stanford, a one-time billionaire, was convicted in March on 13 of 14 fraud-related counts. He was sentenced to 110 years in prison and is serving his sentence in a Central Florida prison.

Many of the dramatic details at Stanford’s fraud trial – including testimony about bribes and blood oaths – came from Davis.

Stanford’s defense attorneys accused Davis of being behind the fraud and tried to discredit him by calling him a liar and tax cheat. Davis, who was Stanford’s roommate at Baylor University for a semester in 1973, said he realized he was party to fraud when he was asked to lie to a potential investor to say the bank had insurance.

Davis said he was “one of those liars” who faked the bank’s numbers but that Stanford was “the chief faker.”

Another top executive in Stanford’s now-defunct empire – former chief investment officer Laura Pendergest-Holt – was sentenced to three years in prison in September after pleading guilty to one count of obstruction of a U.S. Securities and Exchange Commission proceeding.

Two other ex-executives – Gilbert Lopez, the ex-chief accounting officer, and Mark Kuhrt, the ex-global controller – were convicted in November of conspiracy to commit wire fraud and nine counts of wire fraud. They are set to be sentenced Feb. 14.

A former Antiguan financial regulator was also indicted and awaits extradition to the U.S.

 

 

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Latest Comments

  • January 23, 2013 at 2:56 pm
    ExciteBiker says:
    And in case anyone thinks I'm exaggerating, here are the words of Assistant Attorney GEneral Lenny Breuer: MARTIN SMITH: "You gave a speech before the NY Bar Asscn, and in tha... read more
  • January 23, 2013 at 2:43 pm
    Agent says:
    I say put him in next to Bernie and assign Tyrone to be his cell mate. He will then learn the true meaning of being a "kid". He and his boss Stanford should not see the ligh... read more
  • January 23, 2013 at 2:30 pm
    ExciteBiker says:
    We should all take every chance we get to point out that HSBC knowingly laundered billions of dollars for Mexican drug cartels, terorrist groups, and rogue states under intern... read more
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