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C. Todd Sherman/Northeast Mississippi Daily Journal, via Bloomberg News
James M. Davis will plead guilty to fraud and conspiracy. |
James M. Davis, the chief lieutenant of R. Allen Stanford, will plead guilty to fraud and conspiracy after reaching an agreement to cooperate with prosecutors in their case against the Texas billionaire, his lawyer said on Wednesday.
The decision represents a serious blow to Mr. Stanford’s defense because Mr. Davis was involved in the critical decision-making at the Stanford Financial Group and was knowledgeable about the intricacies of Mr. Stanford’s international empire. As chief financial officer, Mr. Davis oversaw billions of dollars worth of certificates of deposit in the Stanford International Bank based on the Caribbean island of Antigua that are at the center of the government’s fraud case.
Investors thought the certificates were safe investments despite their high interest returns, but prosecutors say that Mr. Stanford and Mr. Davis invested them in bogus real estate transactions and risky assets instead. An estimated 30,000 investors lost $7 billion in the scheme, a large portion of them from Latin American countries including Venezuela, Mexico and Colombia.
“We’ve reached a plea agreement,” said David Finn, Mr. Davis’s lawyer. “He will acknowledge publicly what he has already acknowledged to federal prosecutors – that he made a series of terrible mistakes and he fully expects to be held accountable.”
The plea agreement has long been expected. Mr. Finn has been giving public statements for months that his client was manipulated by Mr. Stanford, would accept responsibility for his actions and was helping investigators locate missing funds.
In the indictment of Mr. Stanford last month, Mr. Davis was reported to have been involved in misrepresenting investment information to investors. He also helped prepare Antigua’s senior bank regulator, Leroy King, who is accused of taking bribes from Mr. Stanford, to answer queries from the Securities and Exchange Commission about Stanford bank investments.
Mr. Davis and Mr. Stanford made an odd but close couple. They were friends since their days as students at Baylor University in Waco, Tex., where they were roommates. Mr. Davis was known to be soft-spoken and highly religious, and even began business meetings with prayers. Mr. Stanford was known among colleagues for his hot temper and his taste for the high life, spending lavishly on jets and yachts.
Mr. Davis may formally plead guilty as early as July 13 at an arraignment hearing scheduled at a federal court in Houston. “We’re still cooperating,” Mr. Finn said, helping to “find proceeds Stanford sent overseas, particularly to Switzerland.”
A federal judge this week revoked bond for Mr. Stanford, sending him back to jail to await trial. Dick DeGuerin, his lawyer, has said he will appeal.
Mr. Stanford’s trial could begin as soon as Aug. 25, but Mr. DeGuerin has said it would take as long as a year to prepare the defense. Responding to Mr. Davis’s plea agreement, Mr. DeGuerin said in a statement, “It is human nature for a criminal to try to shift the blame for his own conduct in order to make a deal with the prosecution for a lesser sentence.”
Mr. Stanford has pleaded his innocence but in interviews he has blamed Mr. Davis, saying that he gave Mr. Davis wide latitude to manage the firm’s finances.
“If bad things were happening, he never brought them to my attention,” Mr. Stanford said in April. He characterized as “an absolute lie” Mr. Finn’s claim that Mr. Stanford “used Davis. And if Davis didn’t go along with it, he said he could easily find someone else who would.”
Others named in the indictment of Mr. Stanford, including Laura Pendergest-Holt, the former chief investment officer at the Stanford Financial Group; Gilberto Lopez, a former accounting officer; and Mark Kuhrt, a former controller, have pleaded not guilty. Ms. Pendergest-Holt was a protégée and confidante of Mr. Davis. Mr. King has been detained in Antigua and awaits extradition to the United States.
Source: http://www.nytimes.com/2009/07/02/business/02stanford.html?_r=2&ref=global
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