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Former Billionaire Stanford Gets Hit with 110-Year Sentence in Ponzi Scheme

Source: WSJ - Daniel Gilbert


Posted on 15 Jun 2012 by Neilson

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Allen StanfordR. Allen Stanford, the international financier known for his extravagant lifestyle, was sentenced to 110 years in federal prison Thursday for masterminding a $7 billion Ponzi scheme that was among the largest frauds in U.S. history.

The punishment amounts to a life sentence for Mr. Stanford, 62 years old, who for years enjoyed the rarefied life of a billionaire aboard jets, yachts and homes around the globe.

As he prepared to be sentenced, a shackled Mr. Stanford shuffled to the witness stand and told U.S. District Court Judge David Hittner, "I'm not a thief."

R. Allen Stanford, the international financier known for his extravagant lifestyle, was sentenced to 110 years in federal prison Thursday for masterminding a $7 billion Ponzi scheme that was among the largest frauds in U.S. history.
The punishment amounts to a life sentence for Mr. Stanford, 62 years old, who for years enjoyed the rarefied life of a billionaire aboard jets, yachts and homes around the globe.

As he prepared to be sentenced, a shackled Mr. Stanford shuffled to the witness stand and told U.S. District Court Judge David Hittner, "I'm not a thief."

Mr. Stanford's sentence was 40 years shorter than the prison term given to Bernard L. Madoff, who pleaded guilty in 2009 to orchestrating a $17.3 billion Ponzi scheme. Mr. Stanford's lawyers asked for no more than 10 years and filed notice they would appeal the conviction and sentence.

The Madoff case cast a shadow over the proceedings Thursday as attorneys sparred over the mitigating and aggravating factors in Mr. Stanford's case. His lawyers contended that unlike Mr. Madoff, their client invested in actual businesses and would have been able to repay investors but for the government's intervention. Prosecutors countered that Mr. Stanford kept much more money and expressed much less remorse than Mr. Madoff.

Though investors continue to seek hundreds of millions of dollars from Mr. Stanford in a civil proceeding, the sentence ends the three-year criminal prosecution of Mr. Stanford, who in March was convicted by a federal jury on 13 of 14 counts including fraud, obstructing investigators and conspiracy to commit money laundering.

Mr. Stanford, a native of Mexia, Texas, rose from owning a gym to controlling an empire that included banks, airlines and the largest newspaper on the Caribbean island of Antigua. It was there that Mr. Stanford based his Stanford International Bank, and where he became one of the largest employers and was knighted in 2006.

For two decades, Mr. Stanford lived lavishly, ferrying tailors, bottles of artesian water and exotic fish on his private jets to homes in Miami and St. Croix, according to the U.S. government. He became internationally known as a benefactor of the sport of cricket, and in 2008 Forbes magazine ranked him as the 205th richest American, with a net worth of $2.2 billion.

But that wealth was illegally taken from his clients, according to prosecutors, who accused him of running a "massive, international criminal organization masquerading as a bank."

In 2009, federal prosecutors charged Mr. Stanford with swindling investors by selling them certificates of deposit through the bank he controlled in Antigua and telling them the money would be invested in stocks and bonds. Instead, prosecutors alleged, he funneled $2 billion into risky real-estate ventures and his own businesses.

To cover up the scheme, prosecutors said, he bribed an Antiguan regulator and an outside auditor.

Mr. Stanford didn't testify at his monthlong criminal trial earlier this year. His lawyers portrayed him as an absentee chief executive who entrusted the business to his chief financial officer, James Davis. Mr. Davis pleaded guilty to fraud and conspiring to obstruct a federal proceeding, and testified against his former boss.

After his arrest, Mr. Stanford claimed that his memory was impaired by head trauma from a prison beating he suffered in September 2009. Judge Hittner initially found him incompetent to stand trial because of his addiction to prescribed painkillers, but in December 2011 found him competent after a forensic and psychiatric report said that Mr. Stanford had exaggerated his impairment.

Mr. Stanford and Mr. Madoff aren't the only Ponzi fraudsters sentenced to more than a century in prison—or even the most harshly punished.
Norman Schmidt was sentenced to 330 years by a Colorado judge in 2008, at the age of 72, for a multimillion-dollar Ponzi scheme. After an appeal, his release date was brought forward by 20 years.

Samuel Buell, a criminal law professor at Duke University in Durham, N.C. said penalties for white-collar crimes have gotten tougher over the last decade, following changes to federal guidelines designed to link sentences more closely to victims' losses.

But, he noted, some question such sentences, noting that they are longer than those usually imposed in murder cases. The median sentence for murder was 178 months, or less than 15 years, according to U.S. Sentencing Commission data for the last quarter of 2011.

Some believe such long sentences send an important message. Bart Chilton, a commissioner at the Commodity Futures Trading Commission, welcomed the 110-year sentence for Mr. Stanford.

"I'm pleased to see the justice system work," he said, "and put the baddest of the bad apples—guys rotten to the core—away for a long time."

Representatives of Mr. Stanford's victims agreed. "We are pleased that Mr. Stanford received the harsh sentence that he so justly deserved for destroying the lives of thousands of victims around the world," Peter Morgenstern, a member of the Stanford Investors Committee, said in an email message.


Comments

 
Sean Jun 15 2012 9:50AM Report Abuse
The Hell with him !
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