Davis, 60, admitted three felony counts today before U.S. District Judge David Hittner in Houston andagreed to forfeit $1 billion. Davis has been “cooperating like crazy” with authorities investigating the company, said his defense attorney, David Finn of Dallas.
“Mr. Davis knows he’s looking at very, very stiff punishment down the road,” Finn said after the plea hearing. “Probation is out of the question in this case.”
The Justice Department will request leniency in Davis’s sentencing if it deems his cooperation “sufficient,” Assistant U.S. Attorney Paul Pelletier told Hittner. Davis has met for hundreds of hours with federal investigators, helping them find hundreds of millions of dollars that he claimed Stanford stashed in European banks, Finn said.
“You’ll see just how far back this goes,” Finn said of the alleged fraud. “This didn’t get cooked up overnight.”
Stanford, the company founder who is being held without bail, was to appear before Hittner later today for a hearing on his legal defense. Instead, he was taken to a medical center with what a court aide said was an elevated pulse rate.
“I think it had everything to do with my client and Hittner and the government getting together in court today,” Finn said of Stanford’s health emergency. “You could call it serendipity, but what are the odds?”
Stanford’s assets were frozen by the court at the U.S. Securities and Exchange Commission’s request and his current lawyer has asked to leave the case, saying he might not get paid. A U.S. grand jury indicted Stanford and Chief Investment Officer Laura Pendergest-Holt for fraud in June.
Davis waived indictment and was charged separately with conspiracy to commit mail, wire and securities fraud, as well as mail fraud and conspiracy to obstruct an SEC investigation.
The SEC in a civil suit accused Stanford, Davis and Pendergest-Holt of running a fraud scheme centered on the sale of certificates of deposit by Antigua-based Stanford International Bank Ltd. Stanford and Davis promised “improbable if not impossible” returns on the CDs, the SEC said.
After today’s hearing, Finn told reporters Davis’s cooperation included a visit to his family farm in rural Mississippi, where he helped a government dive team search for evidence in tanks and ponds.
Not a Dime
Asked what the nature of that evidence was, Finn replied, “you’ll find out.” Davis is working as a laborer on a Michigan farm, where he’s being paid $10 an hour, and is penniless, his lawyer said.
“He doesn’t have a dime,” Finn said. “He can’t even pay me.”
Since his July 13 arraignment, Davis has been free on $500,000 bond, which includes a $5,000 cash deposit. He faces as many as 30 years in prison and won’t be sentenced until the government no longer needs his cooperation.
Finn said Davis’s cooperation has focused on two fronts: locating assets Stanford stashed overseas and helping the U.S. extradite Antigua’s top banking regulator, Leroy King, who was indicted along with Stanford for allegedly taking bribes to conceal the fraud.
“Cash payments were being made under the table in an airplane hanger by Allen Stanford to the regulator,” Finn said.
King, who is under house arrest, is scheduled for an extradition hearing in Antigua next month, according to prosecutors.
The case is U.S. v. Davis, 4:09-cr-00335, U.S. District Court, Southern District of Texas (Houston).