Stanford Trial Begins

Jan 25 2012 | 1:32pm ET

Accused hedge fund fraudster R. Allen Stanford pleaded not guilty to running a $7 billion Ponzi scheme at the beginning of his long-delayed trial in Houston yesterday.

Stanford said he was not guilty of "every count"—14 of them, including conspiracy, mail fraud, wire fraud and obstruction of a Securities and Exchange Commission investigation. Prosecutors then launched into their opening statements, calling the defendant a liar, over and over again.

Stanford told his investors "lie after lie" in a 20-year career of "lying, cheating an bribery," prosecutor Gregg Costa said. Witnesses will show "how his lying, stealing and bribing have taken" their money "and the dreams they had with it."

"How did Mr. Stanford get so many people to give him so much of their savings?" Costa asked. "That's where the lying comes in," including alleged whoppers about investing $700 million of his own money in his Stanford National Bank while he was actually taking money out and writing up the value of an unimproved island property from $63 million to $3 billion.

Stanford also bribed his auditor and an Antiguan banking regulator, Costa said.

In his opening, Stanford's court-lawyer said, "We're going to prove this was not a Ponzi scheme at all."

"Mr. Stanford's financial empire was real and did make a lot of money and did pay every penny of what was owed to depositors for 22 years," Robert Scardino said. It wasn't until the SEC sued Stanford and took over his businesses three years ago that any money was lost.

U.S. District Judge David Hittner said the trial could last about six weeks. It only began after Stanford lost several last-ditch bids to once again delay the trial. A week ago, Hittner ended that effort by rejecting the last motion, asking for a delay because a member of the defense team was to undergo surgery.

Scardino also continued to suggest that Stanford is incompetent to stand trial due to brain injuries from a 2009 jailhouse beating and a prescription drug addiction. Hittner declared him competent last month after Stanford's eight-month stay at a North Carolina prison medical facility led doctors their to conclude that he has no brain injury and has been faking memory loss.

"You're still pushing that?" Hittner asked. "My finding still remains. He is competent and ready to go."

Jury selection, which began on Monday and ended yesterday, resulted in a panel of 10 men and five women, including two accountants, a land surveyor, an environmental engineer, a retail optician and a pawn broker.

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