By Anna Driver and Erwin Seba
HOUSTON (Reuters) - Accused swindler Allen Stanford was hospitalized on Thursday with a high pulse rate, hours before 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.
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 (6:30 a.m. EDT) "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.
INVESTORS DUPED
Davis, who has been cooperating with government prosecutors for the last six months, has signed a plea agreement. As part of that deal he has agreed to forfeit $1 billion, which will allow the government to seize any assets it might recover.
The plea agreement, made public by the Department of Justice, requires "substantial assistance" with U.S. investigators as they make their case against Stanford and his associates, and guarantees no suspended sentence or parole.
At the plea hearing, Paul Pelletier, principal deputy chief with the U.S. Department of Justice in Washington, described a decade-long fraud that Davis helped orchestrate.
The former chief financial officer, Allen Stanford and others "duped" investors out of billions of dollars by falsifying documents and bribing regulators and accountants in Antigua, Pelletier said.
Later, Davis apologized for his actions outside the courthouse after the hearing.
"I did wrong. I'm sorry," Davis, who was accompanied by his wife, said. "I apologize. I take responsibility for my actions."
He faces a maximum of 30 years in prison on the conspiracy, fraud and obstruction charges, and will be sentenced on November 20. But that date will likely change as the Davis continues to cooperate with prosecutors.
Davis has been free on $500,000 bail since his initial court appearance in July when he pleaded not guilty.
David Finn, Davis' attorney, told reporters after the hearing that his client is doing manual labor on a family farm in Michigan, earning $10 per hour, quite a departure for a man who earned millions.
Stanford, who has pleaded not guilty to the charges, implied in media interviews before his arrest that Davis was responsible for the fraud, a notion that is hotly disputed by Davis' attorney, Finn.
"Allen Stanford uses people," Finn said, adding that his client has been manipulated by Stanford since they were college students.
Finn told reporters the government's probe focused on finding assets and on Leroy King, the Antiguan regulator who is accused of taking bribes from Stanford.
The plea agreement describes a "blood oath" that Stanford performed with King in 2003 where the Antiguan regulator agreed that he would not "kill the business" of Stanford's bank in return for bribes.
(Editing by Gerald E. McCormick and Steve Orlofsky)
