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Stanford CFO Allegedly Forged Boss’s Name, Refused Reforms

Feb. 17 (Bloomberg) -- R. Allen Stanford was furious to learn that his finance chief, James Davis, forged his name to a 2007 employee memo abolishing a department Stanford created to “reel in” expenses, a former executive testified.

“He called me at home at 11 or 12 one evening, and he was very mad,” Linda Wingfield, Stanford’s former executive director of special projects, told jurors today at Stanford’s criminal fraud trial in federal court in Houston. “He said he did not sign it.”

Wingfield, who held a number of executive positions at Stanford’s companies over 10 years, testified that Davis refused to give the boss access to a corporate computer system with Stanford Financial Group Co.’s financial records. Testifying as a defense witness, she said Davis also ignored or circumvented policies Stanford instituted to clamp down on expenditures.

“He fought us from day one, a department set up by the chairman to try to control costs,” Wingfield said of Davis. “Mr. Davis was always refusing.”

Wingfield’s testimony may bolster Stanford’s claim that it was Davis, not him, who ran the financial services empire and engineered a fraud that cost investors more than $7 billion. Davis pleaded guilty and testified as a government witness earlier in the trial, which is concluding its fourth week.

Airlines, Cricket

Prosecutors accuse Stanford of stealing more than $2 billion from certificates of deposit at his Antigua-based Stanford International Bank Ltd. Instead of holding investor funds in safe assets as he promised, Stanford used their money to fund an extravagant lifestyle and risky ventures including Caribbean airlines, real estate projects and cricket tournaments, prosecutors say.

Stanford, 61, has been jailed as a flight risk since being indicted in June 2009. If convicted of the most serious charges, he faces as many as 20 years in prison.

Wingfield, who also ran some of Stanford side ventures, testified today via a video link from federal court in Orlando, Florida. She said she was too ill to travel.

Robert Scardino, Stanford’s lawyer, asked Wingfield who controlled “all the financial issues, including the treasury, accounting, internal audits and investments” at Stanford’s companies.

‘Nobody Else’

“Mr. Davis -- and the insurance, too,” she said. “There was nobody else who handled all the books.”

Wingfield told jurors she believed Stanford’s court-appointed receiver duplicated efforts and wasted money during the “chaotic” period after the businesses were seized by the U.S. Securities and Exchange Commission in February 2009.

More than 40 Stanford investors crowded into the courtroom today to mark the third anniversary of the SEC crackdown. Angie Shaw, leader of the Stanford Victims’ Coalition, said the group’s motto is “3 and $0,” meaning “three years and zero recovery” by defrauded investors.

The group had planned to wear stickers with those words to court until U.S. District Judge David Hittner asked them not to do so, for fear of distracting the jury.

Houston investor Cassie Wilkinson, 63, said in an interview she lost $500,000 on Stanford CDs and has attended about 80 percent of the trial. A video shown to jurors yesterday, depicting a luxury Antigua resort Stanford was developing with investor money, was the toughest evidence she’s seen yet, she said.

‘Built Another Country’

“He took our money and built another country with it,” Wilkinson said during a break in testimony. “I was fighting back tears to see the lavish way he lived his life, and now we’re left to try to scrape through the rest of ours.”

Assistant U.S. Attorney Gregg Costa spoke with some of the investors during court breaks. “This is who we’re doing this for,” he said outside of court.

Investor Frank Goll, who lost $70,000 on a Stanford CD he bought with friend who was a Stanford adviser, testified for the defense. He told jurors he understood the bank’s investment strategy, knew the deposits were uninsured and thought those were risks he “was willing to take.”

“Anywhere that they could get a good return that was safe, I’m behind it,” Goll told the jury. “Make money, lose money. Sometimes you win, sometimes you don’t.”

Goll testified that during an Internet search he conducted before investing with Stanford, he learned “nobody had ever lost money” on Stanford CDs, a remark that drew laughter from some in the courtroom.

Ralph Janvey

Goll also told jurors he believes the court-appointed receiver, Ralph Janvey, was responsible for his lost investments, not Stanford.

“I believe the receiver was inept and unqualified to handle the assets he was put in charge of,” he testified.

Assistant U.S. Attorney William Stellmach, on cross-examination, asked Goll if he was trying to help his “very close friend,” a female former Stanford adviser, by trying to help Stanford win the case.

“She’s being sued for $1.4 million by the receiver, for all the commissions she earned selling the CDs,” Stellmach told Goll. “Do you think that lawsuit might fail or be hindered if Mr. Stanford is acquitted?”

Goll replied that he didn’t know.

The criminal case is U.S. v. Stanford, 09-cr-342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09-cv-298, U.S. District Court, Northern District of Texas (Dallas).

To contact the reporter on this story: Laurel Brubaker Calkins in Houston at

To contact the editor responsible for this story: Michael Hytha in San Francisco at

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