Defense witnesses say Stanford wasn’t hands-on boss

February 17, 2012

The Houston Chronicle on February 16, 2012 released the following:

“Defense witnesses portrayed R. Allen Stanford as distant from the day-to-day operation of his companies, as his lawyers laid a foundation Thursday for their contention that financial machinations by a star prosecution witness led to fraud charges against Stanford.

Joan Stack, who headed global human resources for Stanford’s companies in the final two years before U.S. regulators shut them down, characterized her boss as “disconnected” from much of the companies’ operations. She said he focused mostly on the Island Club, a resort for the wealthy he hoped to develop on Caribbean islands he owned.

She testified that government witness James Davis, Stanford’s former chief financial officer, worked out of an office in Tupelo, Miss. that Stanford set up to accommodate Davis, his longtime business associate and former college roommate.

Davis pleaded guilty to three felony counts and testified against Stanford during the government’s portion of the trial.

Stack described the Tupelo office as clubby, employing mostly relatives and friends of Davis or Laura Holt, former Stanford chief investment officer who is named in a separate indictment and will be tried later.

Stack said employees in Tupelo reported solely to Davis and Holt rather than to others in the company.

Kelly Bailey, a graphic designer, testified that Stanford told her to “work with Jim” on annual report numbers.

Bailey testified that Davis was “highly disrespectful” of Stanford and once mumbled under his breath “something to the effect of ‘he doesn’t know what he’s doing’” in reference to Stanford as they worked on financial reports.

She acknowledged under government cross-examination, however, that Stanford had the final say on annual reports.

Government witnesses testified earlier in the trial that they saw Stanford and Davis changing numbers on annual reports before sending them to printers, and Davis said they fabricated figures to make financial reports look more favorable.

Bailey said she also recalled last-minute changes on reports, but could not detail what they were.

Stanford is accused of running a $7 billion investor fraud through certificates of deposit issued by his Stanford International Bank in the Caribbean nation of Antigua.”

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To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Gregory Viola Arrested on a Federal Criminal Complaint Charging Him with Mail Fraud

August 12, 2011

The U.S. Attorney’s Office District of Connecticut on August 11, 2011 released the following:

“ORANGE RESIDENT CHARGED WITH DEFRAUDING INVESTORS

David B. Fein, United States Attorney for the District of Connecticut, and Kimberly K. Mertz, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, announced that GREGORY VIOLA, 59, of Orange, was arrested today on a criminal complaint charging him with mail fraud. The charge stems from an alleged scheme to defraud investors of at least hundreds of thousands of dollars via a Ponzi scheme.

According to court documents and statements made in court, VIOLA operated an investment business in Orange. It is alleged that since as early as 2007, VIOLA engaged in a scheme to defraud multiple investors by not investing funds as he had represented. As part of the scheme, it is alleged that VIOLA promised his investors that their funds would be invested, and that they would receive a specified rate of return on the investments as well as the potential for the investment to appreciate. Rather than invest funds provided by investors, it is alleged that VIOLA engaged in a Ponzi scheme in which he used new investor funds to make payments to earlier investors. It is also alleged that VIOLA mailed investors fraudulent statements that falsely represented the amount of funds that the investors had on account.

The criminal complaint specifically alleges that VIOLA provided one investor with a purported E-Trade account statement representing that the investor had in excess of $300,000 on account with VIOLA. Subsequent investigation by law enforcement has revealed that this statement is false, and E-Trade has no record of an account in the investor’s name.

VIOLA voluntarily surrendered himself this afternoon and appeared before United States Magistrate Judge William I. Garfinkel in Bridgeport. He was released on a $100,000 bond, which is secured by two properties.

U.S. Attorney Fein and FBI Special Agent in Charge Mertz noted that the investigation into this alleged scheme is ongoing, and asked individuals who believe they may be a victim of this scheme, or anyone with information related to this scheme, to contact FBI Special Agent Wendy Bowersox at (203) 777-6311.

If convicted, of mail fraud, VIOLA faces a maximum term of imprisonment of 20 years.

U.S. Attorney Fein stressed that a complaint is only a charge and is not evidence of guilt. The defendant is entitled to have this matter presented to a grand jury and, in the event an indictment is returned, he is entitled to a trial at which it will be the Government’s burden to prove guilt beyond a reasonable doubt.

This matter is being investigated by the Federal Bureau of Investigation, with the assistance of the Stamford Police Department. The case is being prosecuted by Senior Litigation Counsel Richard J. Schechter.

In December 2010, the U.S. Attorney’s Office and several law enforcement and regulatory partners announced the formation of the Connecticut Securities, Commodities and Investor Fraud Task Force, which is investigating matters relating to insider trading, market manipulation, Ponzi schemes, investor fraud, financial statement fraud, violations of the Foreign Corrupt Practices Act, and embezzlement. The Task Force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service – Criminal Investigation; U.S. Secret Service; U.S. Postal Inspection Service; U.S. Department of Justice’s Criminal Division, Fraud Section and Antitrust Division; U.S. Securities and Exchange Commission (SEC); U.S. Commodity Futures Trading Commission (CFTC); Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); Office of the Chief State’s Attorney; State of Connecticut Department of Banking; Greenwich Police Department and Stamford Police Department.”

To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN List Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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