US seeks $5.9 billion from indigent Allen Stanford

(Reuters) - In a demand more likely to remain symbolic than be fulfilled, the U.S. government wants Allen Stanford to forfeit $5.9 billion from his massive Ponzi scheme, even though the convicted financier has been declared indigent.

The demand requires court approval, and was made two days before Stanford, who was once considered a billionaire, is to be sentenced for operating a multi-billion dollar fraud. Stanford, 62, could spend the rest of his life behind bars.

According to a Tuesday filing with the U.S. District Court in Houston, the government said the $5.9 billion represents a sum that Stanford's Antigua-based bank had received from investors in certificates of deposit when it was put into receivership in February 2009.

Prosecutors said Stanford International Bank Ltd had $7.2 billion of CD account balances at that time, of which $1.3 billion was fictitious interest.

"While $5.9 billion is clearly a massive amount of money, it is not at all excessive" given Stanford's involvement, U.S. Attorney Kenneth Magidson said in a court filing.

He called the requested amount "conservative," but said it might be harder to prove a higher amount given the duration of Stanford's fraud and lack of complete records.

Neither Stanford's lawyers nor Magidson's office immediately responded to requests for comment.

Once considered a billionaire but declared indigent in 2010, Stanford was convicted on March 6 by a federal jury on fraud, conspiracy and obstruction charges related to his alleged two-decade scam, centered on the sale of bogus CDs.

Calling Stanford a "ruthless predator" and "among the greediest, most selfish, and utterly remorseless criminals," the government recommended that he serve a 230-year prison term, the most recommended under federal law.

That term would be 80 years more than Bernard Madoff got in 2009 for his Ponzi scheme. Madoff was also ordered to forfeit $170.8 billion, more than twice his estimated fraud.

Stanford, in contrast, is seeking a prison term of 31 to 44 months, which could result in his release because he has already been in custody for three years, according to the government.

U.S. District Judge David Hittner presided over Stanford's six-week trial, and will hand down his sentence. He must also approve any forfeiture order.

The case is U.S. v. Stanford, U.S. District Court, Southern District of Texas, No. 09-cr-00342.

(Reporting By Jonathan Stempel in New York)