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Ponzi Trial Face-Off: Stanford v. Old College Friend
January 31, 2012
[ by Melanie Gretchen ]
The Allen Stanford Ponzi trial will play host to a Baylor University reunion of sorts. Allen Stanford and James Davis will meet once again in court, though under very different circumstances.
Davis roomed with Stanford at Baylor, helped him build the Stanford Financial Group after graduation, and served as CFO of the company until its collapse. However, this week, serving as chief prosecution witness against his old friend, he will testify that he witnessed and participated in a $7 billion Ponzi scheme set in motion and directed by Allen Stanford from a bank on the island of Antigua.
Mind you, Davis is no angel and Stanford's lawyers have already told the jury that Davis' story is a lie. And they will cross-examine Davis hard on his contentions that all his misdeeds at Stanford Financial, like cooking the books, were all at the instruction of Allen Stanford.
Having pled guilty and confessed to his participation in the alleged Ponzi scheme that transpired at Stanford Financial, Davis now faces up to 30 years of jail time. He, of course, is hoping that his service as a cooperating witness will convince the court to be lenient during sentencing.
All in the family. Adam Gershowitz, a professor of criminal law at the University of Houston likened the case to an organized crime or Mafia case, "where you have friends who go back years and have worked together for years and one turns on the other to save his own skin."
Up until their business was shut down 3 years ago, Stanford and Davis had a good thing going. Although their personal preferences differ greatly - Stanford was a hot-head who berated employees, while Davis was generous and taught Sunday school at a Baptist church in Baldwyn, Miss. - together, they drove their assets from $14 million in 1987 to $1.7 billion by 2002.
Flash forward. Stanford was incarcerated 2-1/2 years ago. During that time, he was beaten by a fellow inmate in a fight over the use of a telephone - which led psychologists, last year, to find him unfit to stand trial. They said his memory had been damaged by the fight and by his addiction to anti-stress medication. Stanford still contends he suffers memory loss, and has pled not guilty to all charges.
This week, friends will return as enemies in a battle over epic funds. Stay tuned.
For more, go to [NY Times, 1/30/12].
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