Dec 3rd 2012
By Teresa Ambord
It wasn't our fraud! That was a big part of the overall defense presented by two men accused of helping Texas financier R. Allen Stanford cover his tracks when he bilked trusting investors out of $7 billion. The jury took sixteen hours of deliberation over a three-day period to find the men guilty of conspiracy to hide a massive wire fraud scheme.
Stanford's chief accounting officer, seventy-year-old Gilbert Lopez, and global controller, forty-year-old Mark Kuhrt, were each convicted of nine out of ten wire fraud counts and one count of conspiracy to commit fraud.
The Ponzi scheme
Stanford's fraud involved the selling of bogus certificates of deposit at Stanford International Bank, Ltd. based in Antigua. According to prosecutors, Stanford advised investors that their funds were being put into conservative liquid assets and overseen by international money managers. In reality, evidence showed that Stanford and his finance chief, James M. Davis, controlled about 80 percent of the money. Stanford used the money to pay for yachts, private jets, and waterfront mansions. He also used some to finance his own risky business ventures, like cricket tournaments, a Caribbean airline, and resort developments.
Stanford himself was convicted last March and is now serving 110 years in a Florida federal prison. His attorneys are appealing his sentence. Davis is awaiting sentencing, after he pled guilty and testified against Stanford.
Where do Lopez and Kuhrt fit into the scheme?
Defense attorneys for Lopez and Kuhrt told jurors that their clients never intended to falsify records or break any laws. They relied on investment returns given them by Davis and Stanford. Those figures were used to create what turned out to be false financial statements, which unsuspecting investors relied on. In fact, the attorneys said, Lopez and Kuhrt tried to get Davis to publicly disclose that Stanford himself borrowed most of the funds that were supposed to be in investments, but they were overruled by Davis.
"There's no doubt whatsoever there was a massive fraud going on, but it was a Stanford and Davis fraud, not a Lopez and Kuhrt fraud," said Kuhrt's attorney, Richard Kuniansky.
However, prosecutor Jason Varnado told jurors, "They knew the bank was doing one thing and promising investors another, and they helped hide it. The only explanation for that is a criminal explanation."
Other employees were also involved in tracking the stolen funds, but Lopez and Kuhrt are the last to face criminal trial. Following their convictions, the government recommended allowing the men to remain free on bail until they appear before District Judge David Hittner (who presided over the trial) for sentencing on February 14. However, Hittner ordered both men taken into custody.
"Based on the facts in this case, and this being an international scheme, I believe there are enough potential contacts out there that I decline to allow them to remain free," Hittner said.
Attorneys for both men will appeal.