(Adds detail, investor comment, byline)
By Anna Driver and Eileen O'Grady
HOUSTON Jan 22 James Davis, the government's top witness in convicted swindler Allen Stanford's fraud trial, was sentenced on Tuesday to five years in prison for his role in a $7 billion Ponzi scheme.
Davis, 64, who pleaded guilty in 2009 to three charges and could have been sentenced to 30 years, told the court in a breaking voice: "I am ashamed and I am embarrassed." He added that he let down his family, co-workers and thousands of investors.
Davis pleaded guilty to fraud, conspiracy to commit fraud and conspiracy to obstruct a Securities and Exchange investigation.
Stanford was convicted last year of bilking thousands of investors using fake certificates of deposit issued by Stanford International Bank in Antigua. He is serving a 110-year prison term in Florida.
Davis spent a total of 10 days on the witness stand during two trials, including five days testifying against Stanford, his boss for more than 20 years and a former college roommate.
Davis' lawyer, David Finn, had asked for a four-year sentence while prosecutors sought a 10-year sentence.
Prosecutors said Davis' assistance "was invaluable to the government's efforts to fully understand the (Stanford International Bank) fraud, to locate SIB's remaining assets, and to identify and hold accountable the individuals responsible."
U.S. District Judge David Hittner cited Davis' early cooperation with prosecutors, beginning just weeks after the government seized Stanford's assets in 2009, when he handed down the punishment.
While Davis did not personally profit from the fraud in the same "playboy life enjoyed by Stanford," Hittner said that "in no way excuses James Davis."
Davis made about $13 million over 21 years working for Stanford.
At Stanford's 2012 trial the former chief financial officer told jurors that he and Stanford used fake accounting to prop up his offshore bank as withdrawal requests poured in during the financial crisis in 2008.
Davis also testified for the government against Gilbert Lopez, Stanford's chief accounting officer, and Mark Kuhrt, Stanford's global controller. Both men were convicted and are scheduled to be sentenced next month.
Davis may be called to testify against Leroy King, an Antiguan regulator who is fighting extradition to the United States.
He has also agreed to help a coalition of investors duped by Stanford in government lawsuits to recover funds from outside the country.
Angela Shaw, director of the Stanford Victims Coalition, said the five-year sentence was "a shock," considering Davis' long years of deceit.
"For a multi-billion-dollar crime, five years does seem a little light," Shaw said after the sentencing.
However, Shaw is hopeful that Davis has information that can strengthen the government's recovery effort. "It's the investors' last hope."
Earlier this month, the court-appointed receiver in the Stanford case submitted a plan to pay about 18,000 investors an initial payment of $55 million, or about a penny for every dollar lost.
Davis is expected to report to prison in 60 days. (Reporting By Anna Driver and Eileen O'Grady; Editing by Gerald E. McCormick, David Gregorio and Andrew Hay)