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Accountant: Stanford’s bank properly audited
Published:
Friday, February 24, 2012
James Eccles, not shown, holds up certificates of deposit from the Stanford International Bank as other victims of an alleged ponzi scheme gather outside the federal courthouse on February 17, in Houston where R Allen Stanford is on trial. The jailed tycoon is accused of being behind a massive pyramid scheme that took billions from investors. (AP Photo)
HOUSTON—There was nothing “extravagant” about millions that were paid to the outside auditor of jailed US tycoon R Allen Stanford’s Caribbean bank, an accountant told jurors yesterday at the financier’s fraud trial.
Prosecutors allege the bank was at the centre of a Ponzi scheme that took billions from investors. But Morris Hollander, a forensic accountant hired by Stanford’s defense team, testified that his review of financial statements and other documents seemed to show the bank was being properly audited by the businessman’s outside auditor, CAS Hewlett, and the bank was adhering to international accounting rules. Stanford is accused by prosecutors of orchestrating a 20-year scheme that bilked more than US$7 billion from investors through the sale of certificates of deposit from his bank on the Caribbean island nation of Antigua.
They also allege Stanford, whose financial empire was headquartered in Houston, lied to depositors by telling them their funds were being safely invested but instead spent it on his businesses and his lavish lifestyle.
Prosecutors allege Stanford bribed Hewlett, who was based in Antigua, with more than US$4.6 million from a secret Swiss bank account over a ten-year period, to help him hide the massive fraud. Defense attorneys say the money was for payment of auditing services. “Are these amounts (the US$4.6 million) extravagant ... if you were auditing the bank?" Ali Fazel, one of Stanford's attorneys asked. "In my view they are not extravagant," Hollander said. Hollander spent much of his time going over the bank's reports and explaining financial terms to jurors, sometimes in painstaking detail.
This prompted federal prosecutor Gregg Costa to say during a jury break that the testimony was moving at a "glacial pace" and to suggest the defense team was delaying the trial — in its fifth week — so it could have more time to prepare for when Stanford takes the stand. Fazel replied that "assumes Stanford will testify."
Defense attorneys said at the start of the trial the financier would testify. But it's unclear if that will still happen. Attorneys cannot comment about the case due to a gag order. Since Stanford began his defense last week, witnesses have said the financier was not a hands-on boss and that his chief financial officer, James M. Davis, handled the day to day operations of his businesses. Stanford's attorneys have accused Davis, the prosecution's star witness, of being behind the alleged fraud. Defense witnesses have also testified that many of Stanford's business ventures were profitable and depositors were informed there was risk with their investments.
Stanford is on trial for 14 counts, including mail and wire fraud, and could be sentenced to more than 20 years in prison if convicted. Once considered among the US's wealthiest people with an estimated net worth of more than US$2 billion, he has been jailed without bond since being indicted in 2009. (AP)
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