Following part of the appeal of Stanford.
STATEMENT OF ISSUES
I. Whether the Securities and Exchange Commission (SEC) had jurisdiction and regulatory authority over Stanford International Bank Limited (SIB), or its Certificates of Deposit (CDs). And whether, following the SEC’s civil action, the Department of Justice’s (DOJ) criminal Indictment was defective.
II. Whether the simultaneous civil and criminal prosecutions (and sanctions imposed), based on the same underlying events, were violations of the DueProcess Clause of the Fifth and Eighth Amendments, and defendant Stanford’s protection from Double Jeopardy.
III.Whether the Trial Court violated defendant Stanford’s Fourth Amendment protection from illegal searches and seizures.
IV. Whether the District Court abused its discretion when it failed to hold a pre-trial Hearing to determine whether defendant Stanford had any “untainted” funds that could be used to pay for his defense.
V. Whether the Trial Court abused its discretion by (a) disqualifying defendant Stanford’s competent counsel of choice, and; (b) forcing ill-prepared appointed counsel to proceed to trial.
VI. Whether the Trial Court violated defendant Stanford’s Sixth Amendment right to a fair trial, by failing to provide appropriate responses to Jury Notes Two and Three.
VII. Whether defendant Stanford was deprived of his Sixth Amendment right to a fair trial, because pre-trial publicity precluded the assembly of an impartial jury.
VIII. Whether the Trial Court abused its discretion by first deeming defendant Stanford competent, and then failing to grant him adequate time to prepare an effective defense, assist his counsel, or prepare to testify on his own behalf; in violation of the Due Process Clause of the Fourteenth Amendment, as well as his Fifth and Sixth Amendment rights to a fair trial.
IX. Whether the Trial Court abused its discretion by denying defendant Stanford adequate time to prepare an effective defense.
X. Whether the Trial Court violated defendant Stanford’s Sixth Amendment right to a fair trial by failing to provide the jury with a “unanimity of theory” instruction specific to which “misrepresentation” (element), on each of the mail fraud and/or wire fraud Counts constituted the overall “scheme to defraud.”
XI. Whether the Trial Court violated the Due Process Clause of the Fourteenth Amendment, by proceeding with evidence which was insufficient to prove the essential elements of the mail fraud statute.
XII. Whether the Trial Court violated defendant Stanford’s Sixth Amendment right to a fair trial by issuing a modified “Allen charge” that was coercive.
XIII. Whether the Trial Court abused its discretion by enhancing defendant Stanford’s sentence based on information not found in any Count of the Indictment, and that was neither entered into evidence, nor submitted to the jury and proven beyond a reasonable doubt.
XIV. Whether the Trial Court, through its rulings, demonstrated a partiality in favor of the Government that denied defendant Stanford an opportunity to present an adequate defense, in violation of his Fifth Amendment right to Due Process, and his Sixth Amendment right to a fair trial.
XV. Whether under the Cumulative Error Doctrine the issues presented here amount to a denial of defendant Stanford’s Constitutional right to a fair trial, and thus undermined the reliability of the verdict.
Mr. McGuire: Specifically, as to Count 12, which is the Conspiracy to Obstruct the SEC Investigation; we don’t believe the Government put on any evidence or showed that the SEC had authority to investigate Stafford International Bank, which was an offshore bank.
First of all, the SEC does not have the authority to investigate banks in general, much less an offshore [foreign] bank. So, they had no lawful authority to require Mr. Stanford to participate in or cooperate with an investigation of his bank, for which they had no lawful authority to investigate… (vol. 56)(USCA5 11534-11535)
For instance, at a pre-trial Hearing where the Government was requesting a Motion in Limine, barring any discussion about SIB’s eligibility or ineligibility to access federal bailout money (TARP Funds), the prosecution pointed out the following:
AUSA Stellmach: There are two points, Judge; one, we just want to preclude any suggestion that the SIB was ever eligible. Foreign banks only received funds if they had U.S. subsidiaries, which Mr. Stanford’s bank did not, because he didn’t want to subject it to U.S. regulations. So it was never eligible for the TARP or any bailout funds. So it would be misleading to the jury to suggest otherwise… (vol. 36)(USCA5 15453)
Ultimately, the Trial Judge (Hittner) would grant this Motion in Limine (vol. 5)(USCA5 1381-1392)(Doc. 585) and, in the process, would further confirm the SEC’s lack of jurisdiction over the bank by stating:
“[T]he allegation about TARP funds which foreign banks like SIB was not eligible to receive, is GRANTED at this time…” (vol. 36)(USCA5 15469)
AUSA Costa: [w]ho directly regulated Stanford International Bank throughout its histories?
Mr. Young: The FSRC.
AUSA Costa: Which is just in Antigua?
Mr. Young: Yes.
(vol. 50)(USCA5 7697-7698)
The most definitive proof of all, however, is found in the Superseding Indictment itself, under Section (5), which states: Although SIB marketed and sold its CDs within the United States, SIB was an Antiguan-based bank, and was not regulated by any United States banking authority. Instead, SIB was regulated by an agency of the Antiguan Government known as the Financial Services Regulatory Commission (the “Antiguan Regulatory Commission”) which claimed to conduct inspections to determine the solvency of banks, to review the quality of bank’s investments, and to confirm the accuracy of bank’s reported returns. (Doc. 422)
In a related case, the Fifth Circuit has concluded that the Certificates of Deposit offered by SIB were not “covered securities” within the meaning of the preclusion provisions to the Securities Litigation Uniform Standard Act (SLUSA), specified in 15 U.S.C. § 78bb(F)(1)(A).
In yet another Stanford related case (Chadbourne& Parke, LLP v. Samuel Troice, et. al. 134 S.Ct. 1058 (2014) – recently before the Supreme Court), on theissue of “in connection with” and “covered securities”, Justices Scalia, Kagan and Breyer noted the following:
“I had assumed that the purpose of the securities laws was to protect the purchasers and sellers of covered securities. There is no purchaser – or seller of a covered security involved here. It’s.. .it’s a purchaser of not-covered securities who is being defrauded, if anyone…why…why would the Federal Securities Laws protect that person?”
“In all our cases, there’s been something to say when somebody asks the question: how has this affected a potential purchaser or seller in the market for the relevant securities?” “And here there’s nothing to say.”
On July 18, 2014, in ‘Securities and Exchange Commission v. Securities Investor Protection Corporation’. (SEC v. SIPC) (case no. 12-5286) the D.C. Circuit conclusively determined, and conclusively ruled, that the CDs offered by the foreign-incorporated and foreign-domiciled Stanford International Bank were; (a) not “securities” as defined by, or regulated under, the federal securities laws of the United States, and instead were; (b) “debt obligations” of the Bank, which were; (c) not “sold” through, or by, Stanford Group Company, and thus; (d) the purchasers of those CDs were not “customers” of SGC, and were therefore never under the jurisdiction or subject to the regulatory authority of the U.S. Securities and Exchange Commission.
“The [District] Court reasoned that the investors obtained the Antiguan bank’s CDs by depositing funds with the bank itself, not with SGC, and they thus cannot be considered customers of the latter.
We agree that the CD investors do not qualify as customers of SGC under the operative statutory definition.”
On September 5, 2014 the Securities and Exchange Commission conceded to the aforementioned facts as found by the D.C. Circuit Court, and decided that they would not appeal the decision any further.
Beyond the extraterritoriality issue – which is that the United States never had jurisdiction nor regulatory authority over the foreign-incorporated and foreigndomiciled Stanford International Bank – in their new Superseding Indictment the DOJ broadened the dates of the alleged offenses from 1999-2009 (in their June 18, 2009 Indictment)(Doc. 1) to 1990-2010 (Doc. 422). This reach-back (to the year 1990) and forward (to the year 2010) not only renders the Indictment “defective”, it is representative of another DOJ goal, and is a “fraud upon the Court”.
To begin with – and beyond the fact that by February of 2010 defendant Stanford had been in federal custody a full eight months – in 1990 the U.S.-based (Broker/Dealer) Stanford Group Company did not yet exist.
Contrary to his assertions in the Superseding Indictment, AUSA Costa knew that the CDs issued by SIB were neither “offered” by SIB nor “suggested” by SGC to any American citizens or residents until the year 1998 – a full eight years beyond the time frame alleged in the Indictment.
In crafting their new Superseding Indictment, the DOJ realized that a vast amount of defendant Stanford’s wealth was created through real estate ventures prior to 1998- the year of his “Regulation D” filing with the SEC, and long before SIB began “offering” and SGC began “suggesting” the CDs to U.S. citizens.
By their expanding the year of the “fraudulent scheme” back to 1990, the DOJ was then able to lay claim to that pre-1998 wealth, “justify” the Receiver’s unlawful liquidations of pre-1998 assets, and thereby prevent defendant Stanford from accessing any of these assets to utilize in his defense. And more importantly, by expanding the year of the “fraudulent scheme” forward to 2010, they were able (as detailed in ISSUE XIII) to create the appearance that defendant Stanford was culpable for losses which occurred a full year beyond the date of the TRO – a time when the Court-appointed Receiver was in control, and when Stanford was incapable (prohibited by the Government) of honoring SIB ‘s obligations.