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Financier Stanford sues federal agents over civil rights violations

By Carrie Schimizzi

[JURIST] former financier Allen Stanford [BBC profile; JURIST news archive], accused of defrauding investors [indictment, PDF; JURIST report] out of $7 billion in a Ponzi scheme, filed a lawsuit Wednesday accusing federal agents of violating his constitutional rights. The suit, filed in the US District Court for the Southern District of Texas [official website], names 12 defendants, including members of the FBI, the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) [official websites]. Stanford alleges that the defendants used "abusive law-enforcement methods" to pursue a frivolous civil suit [complaint, PDF; JURIST report] against him in order to gather evidence for his criminal prosecution. He also alleges that federal agents prevented him from mounting a proper defense by freezing his assets and then using $51 million of his own assets to fund the civil suit against him. Stanford is seeking [Bloomberg report] $7.2 billion in damages.

Stanford donated more than $2.3 million to lawmakers' campaigns and spent more than $5 million in lobbying efforts while allegedly carrying out the fraud. He has denied the charges [JURIST report] against him and was originally set to be released on $500,000 bail until prosecutors successfully appealed the decision. Through three of his investment companies, Stanford allegedly violated the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 [texts]. In January, a federal judge declared Stanford incompetent to stand trial [JURIST report] in connection with a $7 billion fraud scheme. Judge David Hittner of the US District Court for the Southern District of Texas, who postponed the trial [JURIST report] earlier in the month, ordered Stanford to enter detoxification for an addiction to anti-anxiety and anti-depression medications prescribed to him by prison physicians that has rendered him unable to meaningfully contribute to his defense. A new trial date has yet to be scheduled, though Hittner advised lawyers for both sides to prepare themselves to proceed.

Full post as published by JURIST - The Paper Chase on February 18, 2011 (boomark / email).