Judge delays ruling on Allen Stanford bail

By Anna Driver and Eileen O'Grady

HOUSTON (Reuters) - Allen Stanford will spend Monday night in jail after U.S. prosecutors told a federal judge that the accused swindler would likely flee the country rather than face life in prison if released on bail.

U.S. Magistrate Judge Frances Stacy last week said that Stanford, who faces criminal charges for a $7 billion Ponzi scheme, may leave federal custody, provided he comes up with a $500,0000 bond -- including $100,000 in cash -- and lives with his girlfriend in a Houston high-rise apartment.

But Stanford remains in custody after the U.S. Justice Department opposed bail of any sort and sought to keep him in jail until his trial, now set for August. Stanford, 59, faces life in prison if convicted of all 21 criminal charges.

Now U.S. District Judge David Hittner, who will preside over the upcoming criminal trial, must decide whether Stanford can walk free until his trial begins.

At a hearing on Monday, Hittner said he would decide on the government's motion to revoke Stanford's bond on Tuesday afternoon at the earliest.

Judge Hittner also raised the possibility that the losing side in the bond arguments might appeal his decision to the 5th Circuit Court of Appeals in New Orleans.

If his decision is appealed, it would be judged by the higher court as an "abuse of discretion issue," Judge Hittner told the court.

Both Dick DeGuerin, Stanford's lawyer, and Paul Pelletier, a federal prosecutor on the case, declined to comment on the possibility of an appeal.

SUITED UP

Stanford was brought to Houston federal court for the third time early on Monday, dressed in a dark suit but still shackled, after spending the weekend in the Montgomery County Jail in Conroe, Texas, about 40 miles north of Houston.

The once high-flying billionaire and sports promoter has been in federal custody since June 18, when he was taken into custody by the FBI in Virginia after a Houston grand jury indicted him on charges of conspiracy, fraud and obstruction of justice.

The government argued that Stanford was a flight risk and would likely flee the country rather than face jail for the rest of his life.

"The only way to reasonably assure the thousands of victims who lost billions of dollars that they will get their day in court is to detain Mr. Stanford," said Gregg Costa, an assistant U.S. attorney.

Costa painted Stanford as a callous jet-setter who had no qualms about wrongly taking the retirement and college funds of his investors. Instead, Stanford would spend the money to pay his monthly $100,000 American Express bill and fund his lavish lifestyle.

Prosecutors said that about $1 billion in investor deposits is still missing, which Stanford could possibly tap to fund a quick getaway.