Computer hard drives belonging to the outside auditor of Texas billionaire R. Allen Stanford’s Caribbean bank were apparently erased after the auditor’s death, a prosecutor said today during the financier’s $7B fraud trial in Houston.
The Stanford trial is of more than passing interest here as several local companies invested in his questionable certificates of deposit and there is little chance of recovery. Hand-in-Hand Trust (HIHT) had invested approximately $822 million (at an exchange rate of $203 to US $1) in the Antigua-based Stanford International Bank (SIB). Citizens Bank also lost a significant amount.
The Associated Press said that the information about the hard drives, disclosed when a prosecutor questioned a defence witness, led to a failed mistrial request by Stanford attorneys who said they couldn’t verify the claim and that the imputation of criminal behaviour could irreparably harm their case.
“The jury has heard it and there is no way to take it back,” said Ali Fazel, one of Stanford’s attorneys, AP said.
U.S. District Judge David Hittner denied the motion for a mistrial but instructed jurors that questions from attorneys are not evidence.
Prosecutors have alleged that Stanford’s bank was at the centre of a Ponzi scheme that soaked up billions from investors and the financier bribed the auditor, C.A.S. Hewlett, with millions from a secret Swiss bank account to help conceal the fraud.
Morris Hollander, a forensic accountant hired by Stanford’s defence, testified yesterday that his review of financial statements and other documents seemed to show the bank was being properly audited by Hewlett. But Hollander acknowledged that he had not seen any of the bank’s actual accounting books and records and his conclusions were based only on prepared annual reports and other documents that authorities allege were doctored by Stanford.
While questioned by prosecutor Andrew Warren today, Hollander was asked if he was aware Hewlett’s firm had erased its computer hard drives.
This prompted Fazel to call for a mistrial and for Hittner to ask the jury to briefly leave the courtroom.
Outside the jury’s presence, AP said that prosecutor Gregg Costa told Hittner that U.S. authorities were informed by Antiguan officials that two months after Hewlett died in January 2009, the auditor’s daughter had someone erase the computer hard drives in her father’s office on the island nation.
Costa said Stanford’s attorneys had been given notice that if Hollander told jurors he never had access to Hewlett’s work papers, prosecutors would seek possible explanations.
AP said that Fazel posited that the erasing of the hard drives could have been done to protect client information after the auditor’s office was closed down but that the prosecution’s question “clearly puts in the minds of the jury that something criminal” happened. Fazel argued that since defence attorneys have not spoken with the auditor’s daughter and she is not testifying, there is no way to determine why the hard drives were erased.
Hittner disagreed with Stanford’s attorneys but told jurors the question had been withdrawn by order of the court. Prosecutors did not ask any more about the hard drives, AP reported.
Stanford’s attorneys have asked several other times during the five-week trial for mistrials on other legal issues and those requests also were denied.
The Houston Chronicle reported today that the indictment against Stanford alleges that Hewlett received bribes in exchange for producing favourable financial reports.
Testimony before the jury resumed after about 45 minutes, and Hollander restated his earlier testimony that financial statements show loans to Stanford from his bank in the Caribbean nation of Antigua were for investment in his companies.
The US is alleging that Stanford and others ran a $7 billion fraud using money investors put into certificates of deposit at the bank — which like all Stanford’s ventures was a subsidiary of Houston-based Stanford Financial Group.
Stanford has denied wrongdoing. He is being held without bail because Hittner ruled that his former wealth and international contacts make him a flight risk.