Allen Stanford talks with Texas criminal attorney

Allen Stanford, accused by U.S. regulators of an $8 billion Ponzi scheme, is in talks with a Houston criminal attorney who is assembling a group of lawyers to represent the billionaire Texan.

"Right now, I'm proceeding as his lawyer and I'm trying to put together a team that will address all the problems that he faces," Dick DeGuerin, a well-known Texas criminal attorney, said on Thursday.

The U.S. Securities and Exchange Commission has charged Stanford, two of his top aides and three of his companies with operating a long-running fraud involving high-yield certificates of deposit. He is also accused of misappropriating $1.6 billion in investor funds.

Stanford does not face any criminal charges.

"From what I've been able to figure out, is this is not a Ponzi scheme, it is not toxic assets and it is not toxic loans," DeGuerin said. "There were hard assets for all the investments. And then SEC came in like gangbusters and has just incinerated the companies and caused a panic."

In a Ponzi scheme, earlier investors are paid with funds raised from later investors.

Stanford investments were further whittled down by market losses and the SEC's action prompted governments in Panama, Antigua and Venezuela to take over the company's foreign banks, the attorney said.

DeGuerin, who represented cult leader David Koresh, has not yet been retained as Stanford's attorney of record because Stanford has no money available to pay him. All of the billionaire's assets have been frozen by a court-appointed receiver as the SEC pursues the civil fraud charges.

DeGuerin plans to ask a judge in U.S. District Court in Dallas to free up some funds so Stanford, who owns luxury homes in Texas, Florida and the Caribbean, can pay his lawyers.

Stanford came to Houston to talk to DeGuerin several days ago and has since returned to Fredericksburg, Virginia, where he is staying, DeGuerin said.

"He's very upset with what's happened to his company and what's happened to his investors," DeGuerin said.

James Davis, the company's chief financial officer who faces the same charges, is cooperating in the fraud probe, his lawyer's office said.

On March 11, the SEC filed papers with the federal court in Dallas that said Stanford refused to cooperate in the probe, citing his Fifth Amendment right against self-incrimination.

(Published by Reuters - March 26, 2009)