Sunday, April 11, 2010

Stanford Judge Allows Attorney Switch, Says No More

R. Allen Stanford, the Texas financier accused of leading a $7 billion fraud scheme, will be allowed to switch criminal defense lawyers, a federal judge said.

Before he let attorneys Michael Essmyer and Robert Bennett take over Stanford’s defense today, U.S. District Judge David Hittner in Houston cautioned the defendant it would be the last time he would be allowed to change lawyers.

“You’ve had 10 attorneys enter or attempt to enter this case on your behalf,” Hittner said. “If I grant this I will not entertain any further substitutions.” The judge also said the swap wouldn’t alter Stanford’s scheduled Jan. 24 trial date.

Stanford was indicted in June on 21 criminal counts by a federal grand jury in Houston. Facing parallel allegations in a previously filed lawsuit by the U.S. Securities and Exchange Commission, he has denied any wrongdoing.

Houston lawyers Kent Schaffer and George “Mac” Secrest had most recently been defending the financier. Schaffer entered the case in September when Stanford was briefly represented by the Federal Public Defender’s office in Houston.

He is being held without bail awaiting trial on charges he bilked investors through a scheme involving bogus certificates of deposit sold through Antigua-based Stanford International Bank Ltd.

Stanford, in court today, protested Hittner’s admonishment about his changes of counsel, citing the U.S. Constitution.

Sixth Amendment

“Four of those attorneys you refused to allow to represent me.” Stanford said. “I have the Sixth Amendment right to pick my own counsel.”

Hittner replied, “Over and over again?”

Schaffer, in a court filing yesterday, asked Hittner to let him and Secrest step aside as Stanford’s defense counsel because the financier has refused to cooperate and disagrees with their defense strategy.

“If our client doesn’t want to work with us, and some other lawyer wants in, I’m not talking him out of it,” Schaffer said in a March 30 phone interview after Essmyer filed papers seeking permission to take over the case.

A partner in Essmyer, Tritico & Rainey LLP, Essmyer said in a telephone interview last week that he has numerous corporate clients and defended financial executives during the savings and loan crisis of the 1980s.

Robert Bennett

His co-counsel, Robert Bennett, is known for defending doctors, lawyers and bankers against professional misconduct claims and for his corporate legal work, according to the Bennett Law Firm PC Web site.

Stanford was initially represented by Houston criminal defense lawyer Dick DeGuerin, who withdrew from the case in late July after he and Stanford disagreed about how he’d be paid.

After DeGuerin’s exit, Stanford was assigned a federal public defender with whom Schaffer worked as co-counsel before agreeing to take charge of the case in October when funds became available for his payment.

Stanford has had difficulty accessing roughly $100 million in legal liability insurance his Stanford Financial Group of companies purchased from Lloyd’s of London. Stanford claims he can’t afford a lawyer without the insurance proceeds, because all his corporate and personal assets were frozen by court order after the SEC sued him in February 2009.

The underwriters are paying Stanford’s defense costs pursuant to a federal appeals court order, until a lower court judge rules on whether Lloyd’s properly denied Stanford’s coverage claim.

Forensic Accountant

Lloyd’s says Stanford’s policy was voided by a guilty plea from James M. Davis, Stanford’s finance chief, and a forensic accountant’s finding that the Stanford companies were built on fraud.

Schaffer, whose hourly rate is $600, said last week that Lloyd’s has paid him in full for the more than $1 million in time and at least $200,000 in out-of-pocket expenses he’s amassed in representing the jailed financier.

After today’s hearing, Essmyer told reporters Hittner made him promise to remain in the case whether Stanford gains access to his insurance proceeds or not.

Essmyer said he normally charges from $375 to $700 per hour, and he expects his work for Stanford to be at the higher end of that billing range.

Schaffer, outside the courtroom, said he’s pleased to be out of the case, saying he wasn’t interested in working with a client who wanted to “dictate how things proceed.”

“I think Judge Hittner got a good picture today of what we’ve been dealing with,” he said.

The criminal case is U.S. v. Stanford, 4:09-cr-00342, U.S. District Court, Southern District of Texas (Houston). The civil case is SEC v. Stanford International Bank, 3:09- cv-00298, U.S. District Court, Northern District of Texas (Dallas).

By Laurel Brubaker Calkins and Andrew M Harris

Source: BusinessWeek

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