Allen Stanford must stay in jail: court

Texas billionaire Allen Stanford gives members of the media a thumbs up as he leaves the Bob Casey Federal courthouse in the custody of U.S. Marshals in Houston June 29, 2009.

HOUSTON (Reuters) - A federal appeals court in New Orleans said on Monday that accused swindler Allen Stanford must stay in jail until his fraud trial.

Stanford, accused of leading a $7 billion fraud involving certificates of deposit issued by his Antigua bank, has been in federal custody since his arrest in Virginia on June 18.

U.S. District Judge David Hittner in Houston ruled in June that Stanford was a flight risk and should remain in custody. The U.S. Court of Appeals for the Fifth Circuit upheld that ruling, a court document showed.

"We're disappointed with the decision," Robert Luskin, a Washington attorney who filed the appeal on Stanford's behalf, said in an email. "Allen Stanford deserves to be released and needs to be released in order to effectively assist in his own defense."

U.S. prosecutors had argued that Stanford, 59, who faces life in prison if convicted on all charges in a 21-count indictment, had the means and motive to flee.

The appeals court ruling is yet another twist in a legal battle to get the former billionaire out of jail. Stanford was initially granted bail by a magistrate judge, but Hittner reversed that action.

Stanford's attorneys appealed Hittner's ruling to the higher court in New Orleans, arguing the order was based on erroneous information and violated their client's constitutional rights.

No trial date has been set, but Stanford is due in court on Thursday for a hearing before Hittner.

Stanford's criminal attorney, Dick DeGuerin, has asked to withdraw from the case because, among other reasons, he has yet to be paid and Hittner is due to hear arguments on that motion.

The criminal case is filed in federal court in Houston, 4:09-cr-00342 USA v. Stanford et al.

(Reporting by Anna Driver; Editing by Steve Orlofsky)