HOUSTON – A former employee testifying Monday in the fraud trial of jailed Texas financier R. Allen Stanford told jurors he worked in an office in which unqualified people, including an executive's farm hand and preacher, were hired as financial analysts and where he was asked to alter financial figures.
Mark Collinsworth was called as a prosecution witness, but his testimony seemed to benefit Stanford's defense as he told jurors under questioning by the financier's attorneys that Stanford was unaware of the hiring problems. Collinsworth instead said the person responsible for the troubled working environment was Stanford's right hand man, James Davis, and another company official, Laura Holt.
However, a financial regulator who dealt with Stanford described him to jurors as "hands on" when it came to running his various businesses and she alleged he controlled how his Caribbean bank — at the center of fraud allegations against him — was regulated.
Prosecutors allege Stanford masterminded the fraud in which he bilked investors out of more than $7 billion in a massive Ponzi scheme centered on the sales of certificates of deposit from his bank in the Caribbean island nation of Antigua. Authorities allege he used depositors' money to fund his lavish billionaire lifestyle.
But Stanford's attorneys contend the financier was a savvy businessman whose financial empire was legitimate. They have suggested Davis, the ex-chief financial officer for the financier's company, is the real culprit behind the financial fraud. Davis has pleaded guilty in the case and is expected to be called by prosecutors this week. Holt has pleaded not guilty and is set to be tried with two other ex-Stanford executives in June.
Collinsworth, who worked as an asset allocation manager at the Memphis, Tenn., office of one of Stanford's companies, testified he felt the preacher at Davis' church and Davis' farm hand should not have been hired as analysts for the company. Stanford businesses, headquartered in Houston, had offices in the U.S., Latin America, the Caribbean and Europe.
"I don't think he should have been an analyst. He just couldn't get a grasp of finance, how the markets worked," Collinsworth said of Davis' preacher.
Collinsworth testified that Holt, the chief investment officer for Stanford's companies and who also worked in Memphis, had invested the company's funds with a hedge fund run by her husband, who previously had been a personal trainer. Collinsworth also said Holt had asked him to change "from negative to positive" figures related to a financial model Stanford's company used to manage its investments. He said he didn't change the numbers but doesn't know if they were altered by someone else.
"It's very clear in your mind Mr. Stanford relied on Mr. Davis and Ms. Holt to run the numbers portion of his business when it came to" the bank? Ali Fazel, one of Stanford's attorneys asked.
"Yes," Collinsworth replied.
But when questioned again by prosecutors, Collinsworth said he didn't know how many times Davis or Holt met with Stanford or what they told him at those meetings.
Marian Althea Crick, the chairwoman of the Financial Services Regulatory Commission in Antigua, which regulated Stanford's bank, portrayed Stanford in her testimony as a man who was firmly in charge of his businesses and who allegedly became a part of the regulatory process.
"To me it was clearly a conflict," Crick said of Stanford's alleged efforts to insert himself in the regulatory process. "If an individual could be part of a regulatory regime and at the same time own an entity that is regulated, this brings to mind a saying we have at home: this would be a classic case of the rat being put in charge of the cheese."
Crick told jurors that when she was the regulatory commission's executive director, she went back and forth several years with Stanford about how his bank was regulated and reviewed until 2002, when she believes Stanford's influence eventually forced her to resign. The person who replaced her, Leroy King, was indicted on allegations he took bribes from Stanford and is awaiting extradition to the U.S. from Antigua. Crick returned to the commission as its chairwoman in 2009.
Stanford is on trial for 14 counts, including mail and wire fraud, and faces up to 20 years in prison if convicted. He was once considered one of the United States' wealthiest people, with an estimated net worth of more than $2 billion.