U.S. News

Allen Stanford loses third bail bid

NEW YORK (Reuters) - A federal judge in Houston has denied Allen Stanford’s request for bail a third time, saying the Texas financier can while locked up properly prepare his defense against charges he ran a $7 billion Ponzi scheme.

Accused swindler Allen Stanford arrives at Federal Court in Houston in the rain December 17, 2009. REUTERS/Donna Carson

U.S. District Judge David Hittner rejected Stanford’s argument that the 19 months he will have spent in jail prior to his scheduled January 24, 2011 trial violates his constitutional rights to due process, effective assistance of counsel, and excessive bail.

While the safety and security process at Stanford’s detention center “may be frustrating for Stanford and his attorneys, and the accommodations much less ‘posh’ than Stanford prefers, there is no evidence that it is so burdensome as to impede his ability to prepare for trial,” Hittner wrote in a 20-page opinion.

Citing a January 2009 decision by another federal court not to release jailed Minnesota businessman Tom Petters ahead of his trial for running a Ponzi scheme, Hittner also rejected Stanford’s argument that the complexity of his case warranted bail.

The judge said this would lead to an “absurd” result that the more complicated the crime, the more likely a defendant should be released ahead of trial.

Petters was convicted in December.

Robert Bennett, a lawyer for Stanford, did not immediately return a call seeking comment.

Federal prosecutors accused Stanford in a 21-count indictment of running a Ponzi scheme.

A Ponzi scheme is where a person uses money from new investors to repay earlier investors. Victims typically include those who have not been repaid when the scheme is uncovered.

Two weeks ago, Hittner decided that Stanford will be tried alone, agreeing to the request of some co-defendants to sever their trials. One, former Stanford Financial chief investment officer Laura Pendergest-Holt, argued that the “egregious and circus-like conduct” by Stanford and his latest set of lawyers could jeopardize her right to a fair trial.

A federal appeals court affirmed Hittner’s two prior denials of bail for Stanford.

The case is U.S. v. Stanford, U.S. District Court, Southern District of Texas, No. 09-cr-00342.

Additional reporting by Martinne Geller; editing by Carol Bishopric