Allen Stanford ruled as a "charismatic dictator" by using "money, flattery, intimidation and fear" to carry out a $7 billion investment fraud, the businessman's former finance chief told a court in Houston, Texas, yesterday.
Jason Davis, once a college roommate of Stanford, gave evidence against his former boss having pleaded guilty in 2009 to aiding him in the alleged Ponzi scheme.
Facing 30 years in prison for his own part in the crime, Davis said that he had realised as long ago as 1991 that the business he was working for was based on a scam, yet he aided Stanford because he wanted to "please" him. "I was proud, embarrassed. I was a coward," he admitted.
On the most dramatic day of the trial so far, Davis testified that he began discussing the significant gap between what the Stanford International Bank owed its investors and the actual value of its assets one year later.
But his employer reassured him "the bank was going to grow and dwarf this small amount that was so-called missing," he said, claiming Stanford, pictured, believed they would be able to "close that hole".
Having pleaded not guilty, Stanford's defence is that he was merely the gregarious front for the business, and that he was unaware of its illegal and flawed model because Davis, as the man in charge of the accounts, misled him. However, Davis said that Stanford had even joked that he would use this defence if they were ever caught, telling him: "I'll tell them you were on the books and I was out building my companies... I'll just blame it all on you."
Nevertheless, he stayed on as chief financial officer, refusing even to trust his secrets with his wife. "I believed in Mr Stanford – wrongfully so, regrettably so, God forgive me so," he said yesterday. "But I continued to stay there and lie with him."
Davis said that at one point the pair did not speak for three months, but that their relationship could also be the stuff of Hollywood – such as when Stanford took him for a ride in his new Mercedes Benz at 170mph.
Their bank, which collapsed at the cost of investments from thousands of people around the world, had been based in the Caribbean – first in Montserrat and then in Antigua – in order to avoid the oversight of US regulators, Davis told the jury.
He added that Stanford had even agreed to "codify" an agreement which would shield the bank from scrutiny with Antigua's main banking regulator, Leroy King. "Mr Stanford said they actually cut themselves and had a blood oath," said Davis, to the apparent surprise of Stanford in the dock.Reuse content