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Stanford Trial: Star witness admits to lying to investors

Published:Tuesday | February 7, 2012 | 9:53 AM

HOUSTON, Texas, CMC – Lawyers for Allen Stanford on Monday told the federal court hearing the Texan financier’s fraud trial that the prosecution’s star witness, who himself admitting to lying to investors, cannot be trusted to tell the truth on the witness stand.

James M. Davis, Stanford’s former chief financial officer, has testified that he lied and helped to conceal an alleged $7 billion Ponzi scheme, involving Stanford’s Antigua-based Stanford International Bank (SIB).

However on Monday, his third day on the stand, he told the court under cross-examination by Stanford’s defence team that he was telling the truth about the tycoon’s complicity in a Ponzi scheme.

“Can you tell the jury how we know when you are telling the truth?” Robert Scardino, one of Stanford’s attorneys, asked Davis under cross examination.

The US government claimed that the alleged Ponzi scheme centered on bogus certificates of deposit issued at the SIB.

Davis has testified that Stanford stashed depositors’ money into a Swiss bank account, from which he used money to operate his businesses, pay for his lavish lifestyle, and bribe Antiguan regulators and auditors.

They also charged that Stanford lied to depositors by telling them their money was being safely invested. Stanford has repeatedly denied any wrongdoing.

Stanford faces 14 counts, including mail and wire fraud, in the criminal case.

He faces up to 20 years in prison if convicted.

In a plea agreement with prosecutors, Davis pleaded guilty to three fraud and conspiracy charges in 2009 in exchange for a possible reduced jail sentence.