UPDATE 4-Allen Stanford incompetent for trial -US judge

Wed Jan 26, 2011 8:17pm EST

* Stanford currently unable to assist in his defense-judge

* Indicted for alleged $7 billion fraud

* Stanford suffered 2009 head injury while in custody

* Doctors say anti-anxiety meds should stop-ruling (Adds defense comment)

By Dan Levine

SAN FRANCISCO, Jan 26 (Reuters) - Financier Allen Stanford is incompetent to stand trial at this time over accusations that he led a $7 billion fraud, a U.S. judge in Texas ruled on Wednesday.

Stanford, who had been accustomed to jetting around the globe in private aircraft, was indicted in 2009 on 21 counts including securities fraud and money laundering. U.S. prosecutors accuse him of creating false accounting records, lying to investors and bribing a regulatory official in Antigua.

Stanford has pleaded not guilty and was previously scheduled to begin trial this week. But that was postponed amid uncertainty about his condition.

In a written ruling, U.S. District Judge David Hittner found that Stanford did not have the present mental capacity to assist his lawyers in his defense.

While incarcerated, Stanford sustained a head injury during a 2009 confrontation with another inmate and underwent surgery for repair of facial fractures.

Psychiatrists for both the government and the defense who examined Stanford also recommended that his anti-anxiety medication be withdrawn. One doctor testified that it was unclear whether Stanford is incompetent for trial because of the injury, or due to over-medication.

The government contends that Stanford is legally competent, but nevertheless asked the court to move him to a suitable facility for psychiatric evaluation.

A representative for the U.S. Attorney's office in Houston was not immediately available to comment on Wednesday.

Hittner rejected defense arguments that the judge could commit Stanford to a private medical facility. Instead, Hittner recommended that Stanford be sent to a medical facility within the U.S. Bureau of Prisons for treatment.

Ali Fazel, an attorney for Stanford, said once Stanford is weaned off his medication, additional tests will determine how much damage was caused by the prison injury, and the drugs.

"We just have to take it a step at a time," Fazel said.

The judge did not specify a new trial date, though he admonished attorneys on both sides to diligently prepare despite Stanford's absence.

The case in U.S. District Court, Southern District of Texas is United States v. Robert Allen Stanford, 09-cr-342. (Reporting by Dan Levine; Editing by Gary Hill, Tim Dobbyn and Bernard Orr)

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