Stanford Hospitalized as CFO Pleads Guilty to Fraud

HOUSTON (Reuters) - Accused swindler Allen Stanford was hospitalized with a high pulse rate on Thursday, hours before he was to appear at a court hearing where his former top aide entered the first guilty plea in a $7 billion fraud case.

James Davis, 60, pleaded guilty to three felony counts as part of a plea deal with federal investigators. Davis was the former chief financial officer of Stanford International Bank, which is accused of swindling investors out of $7 billion through a Ponzi scheme involving certificates of deposit issued by Stanford's Antigua bank.

Davis' plea deal signals that the U.S. government is likely to bring more charges in the Stanford case, said David Finn, Davis' lawyer.

Stanford, 59, missed a court appearance to decide his legal representation because he was hospitalized. The once high-flying financier and cricket promoter was Davis' long-time friend and his former college roommate at Baylor University in Waco, Texas,

At 5:30 a.m. CDT (1030 GMT) "Mr. Stanford was found to have an irregular electrocardiogram and an extremely high pulse rate," U.S. District Judge David Hittner said at a hearing. "He was taken to Conroe Regional Medical Facility."

Dick DeGuerin, Stanford's lawyer, said his client has a history of high blood pressure and has had trouble getting medication at the Conroe, Texas, jail where he is being held awaiting trial.

The Conroe Regional Medical Facility declined to release any further information about Stanford.

Stanford is the second high-profile fraud case to shake public confidence in Wall Street and the U.S. financial regulatory system, after veteran financier Bernard Madoff pleaded guilty to a massive Ponzi scheme that could have cost investors as much as $65 billion.

The plea deal will put "tremendous pressure" on Stanford to plead guilty, said Tom Melsheimer, a former federal prosecutor now practicing in Dallas.

"Clearly, this is bad news for Mr. Stanford," Melsheimer said. "In a financial fraud case cooperating insiders are always key to the government's proof." Davis is likely to take the stand and testify against Stanford, he said.