Bloomberg News

Allen Stanford Found Mentally Fit for Fraud Trial in January

January 04, 2012

(Updates with defense’s request in 24th paragraph.)

Dec. 23 (Bloomberg) -- R. Allen Stanford, whose lawyers failed to convince a judge that he’s mentally unfit to stand trial, was ordered to face a jury next month on charges he swindled investors of more than $7 billion. The trial is to begin with jury selection on Jan. 23.

Stanford’s defense team argued unsuccessfully that his mental capacity was diminished by head injuries he suffered in a 2009 jailhouse assault and the effects of powerful anxiety medications prescribed in prison after the beating.

“I have found by a preponderance of the evidence that Stanford is competent to stand trial,” U.S. District Judge David Hittner in Houston said yesterday in finding Stanford able to assist in his defense.

Hittner’s ruling followed 2 1/2 days of debate over the extent of brain damage Stanford, 61, suffered from the assault and the extent to which he might be faking memory loss.

“He wants to con his way out of this case the same way he conned investors for more than 20 years,” Assistant U.S. Attorney Gregg Costa told Hittner yesterday. “Don’t let him do it.”

Robert E. Cochrane, the psychologist who was Stanford’s lead evaluator at the federal prison hospital in Butner, North Carolina, testified that the former financier failed every test designed to expose fakers.

Stanford’s claim of complete retrograde amnesia, the loss of the memory of what happened before the event responsible, is “remarkable” because it is so rare, Cochrane said.

First Amnesia Report

Stanford first reported having lost his memory after he arrived at Butner in February, more than a year after the assault, the government said.

“Every doctor on the stand agreed that Mr. Stanford is not suffering from the complete retrograde amnesia he repeatedly claimed he had,” Costa said. Once it is accepted that Stanford is exaggerating his memory loss, “it pulls the rug out from under all the other psychological problems he’s reporting,” the prosecutor said.

Ali Fazel, Stanford’s lead lawyer, argued that all the examining doctors agreed “He’s not right. There’s something wrong with him.”

Fazel said Stanford’s brain trauma and psychological impairments leave him incapable of assisting his lawyers or testifying in his own defense.

“Mr. Stanford isn’t running away from anything,” Fazel said. “He wants to fight.” Fazel said.

Desire to Help

Stanford was assaulted and over-medicated while in government custody and wanted the “opportunity to get better and help his counsel,” Fazel argued.

The defense put on testimony from three psychiatrists or neuropsychologists who all said the former billionaire is incompetent.

“He says it’s like there’s a blackboard with all his life written on it, but there are clouds that obscure it,” Victor Scarano, a forensic psychiatrist who examined Stanford for the defense, testified Dec. 21. “Every once in a while, a cloud opens up and he can connect with the memory, and then the clouds comes back.”

Scarano testified Stanford can’t recall some of his children, romantic encounters or business details. He retains “partial pieces” of memory, Scarano said.

Ralph Lilly, a neurologist for Stanford’s defense, testified Dec. 21 that the ex-financier’s brain damage and health problems, including depression, heart and liver disease, have put him “at risk for suicide.”

All-Night Observation

Based on news media reports of that testimony, Stanford was placed under psychiatric watch Wednesday at the federal lockup in Houston. He arrived in court yesterday morning complaining heatedly to his attorneys of having been kept awake and under observation in the jail’s “psyche hole” all night.

A prison official told Hittner an overnight mental evaluation was conducted out of “an abundance of caution,” given Stanford’s high profile and his own doctor’s testimony. She said Stanford was to be re-evaluated last night to determine if he can be returned to the general prison population.

Stanford has been held as a flight risk since his June 2009 indictment on charges of defrauding investors through a scheme built on allegedly bogus certificates of deposit at Antigua- based Stanford International Bank Ltd.

Hittner delayed Stanford’s trial, first set for last January, after three doctors testified that the financier was incapable of assisting in his defense because of his drug dependency and potential effects from the head injury.

Houston Jail

Stanford was sent back to a Houston lockup in November after Butner medical officials certified him competent to stand trial.

Prosecutors say Stanford skimmed more than $1 billion of investor funds to acquire a fleet of jets and yachts, multiple mansions and a private Caribbean island, as well as to give money to women with whom he had children. He has denied wrongdoing.

Stanford’s defense team asked Hittner before the ruling to delay the start of Stanford’s trial until late April, if he found the financier fit to face a jury. Hittner said he would rule on that request next week, as well as issue a more complete ruling explaining his decision finding Stanford competent for trial.

The case is U.S. v. Stanford, 09-cr-342, U.S. District Court, Southern District of Texas (Houston).

--Editors: Peter Blumberg, Charles Carter

To contact the reporter on this story: Laurel Brubaker Calkins in Houston at laurel@calkins.us.com.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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