Prosecutors to appeal Stanford's release on bail

Texas billionaire R. Allen Stanford's release on bail while he awaits trial on charges he swindled investors out of $7 billion in a massive investment scam could be thwarted if prosecutors get their way.

U.S. Magistrate Judge Frances Stacy on Thursday said Stanford could be released on $500,000 bail but told prosecutors, who had asked the financier be held in jail, she would delay her order until Friday to give them time to appeal her decision. The bail includes a $100,000 cash deposit.

Dick DeGuerin, Stanford's attorney, had asked for a reasonable bail amount, saying his client is broke because authorities have seized all his assets, including his underwear and socks. He said Stanford wants to fight the charges against him, not flee.

"He could have fled in the several months this was developing, very easily," DeGuerin said.

Prosecutor Paul Pelletier argued Stanford should be held without bail because he might have access to billions of dollars in unaccounted investor funds, faces a potential life sentence if convicted and has an international network of wealthy acquaintances who would help him.

"There are no conditions that will guarantee this defendant's appearance in court," Pelletier said.

Earlier Thursday, Stanford pleaded not guilty during his arraignment to charges filed last week in a 21-count indictment.

Laura Pendergest-Holt, Gilberto Lopez and Mark Kuhrt, three executives with the now defunct Houston-based Stanford Financial Group, also entered not guilty pleas.

Jury selection in the trial of Stanford and the others who were indicted was set for Aug. 25 but it will likely be delayed.

The billionaire and the executives are accused of orchestrating a massive fraud by misusing most of the $7 billion they advised clients to invest in certificates of deposit from the Stanford International Bank on the Caribbean island of Antigua.

During the detention hearing, Pelletier said investigators found a secret Swiss account Stanford controlled that was drained of more than $100 million in December.

Jeffrey Ferguson, a forensic examiner hired to review the records of Stanford Financial Group and its affiliated bank, testified nearly $1.2 billion of the $7 billion Stanford and his co-defendants are accused of bilking from investors can't be accounted for.

DeGuerin said the missing $1.2 billion was not taken by Stanford and the Swiss account was not secret but used to pay investors who asked for their money back when the bank's problems became public.

After DeGuerin objected, Pelletier referred to it as the "unsecret bank account."

Stanford's elderly father James and at least 10 other family and friends were at the nearly day-long detention hearing.

Stanford has been in federal custody since he was arrested in Virginia on June 18. He was returned to Texas on Tuesday and is being held in the Montgomery County Jail in Conroe, just north of Houston. He was taken to the courthouse in leg irons, an orange prison uniform and handcuffs.

Each of the most serious counts Stanford faces carry prison terms of up to 20 years. But prosecutors say sentencing guidelines could increase his total sentence to life in prison.

Also indicted is Leroy King, the former chief executive officer of Antigua's Financial Services Regulatory Commission. He was taken into custody by island authorities and will now face extradition proceedings. King is accused of accepting more than $100,000 in bribes to turn a blind eye to irregularities.

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