By Anna Driver and Eileen O'Grady
HOUSTON (Reuters) - Allen Stanford will spend Monday night in jail after U.S. prosecutors told a federal judge that the accused swindler would likely flee the country rather than face life in prison if released on bail.
U.S. Magistrate Judge Frances Stacy last week said that Stanford, who faces criminal charges for a $7 billion Ponzi scheme, may leave federal custody, provided he comes up with a $500,0000 bond -- including $100,000 in cash -- and lives with his girlfriend in a Houston high-rise apartment.
But Stanford remains in custody after the U.S. Justice Department opposed bail of any sort and sought to keep him in jail until his trial, now set for August. Stanford, 59, faces life in prison if convicted of all 21 criminal charges.
Now U.S. District Judge David Hittner, who will preside over the upcoming criminal trial, must decide whether Stanford can walk free until his trial begins.
At a hearing on Monday, Hittner said he would decide on the government's motion to revoke Stanford's bond on Tuesday afternoon at the earliest.
Judge Hittner also raised the possibility that the losing side in the bond arguments might appeal his decision to the 5th Circuit Court of Appeals in New Orleans.
If his decision is appealed, it would be judged by the higher court as an "abuse of discretion issue," Judge Hittner told the court.
Both Dick DeGuerin, Stanford's lawyer, and Paul Pelletier, a federal prosecutor on the case, declined to comment on the possibility of an appeal.
SUITED UP
Stanford was brought to Houston federal court for the third time early on Monday, dressed in a dark suit but still shackled, after spending the weekend in the Montgomery County Jail in Conroe, Texas, about 40 miles north of Houston.
The once high-flying billionaire and sports promoter has been in federal custody since June 18, when he was taken into custody by the FBI in Virginia after a Houston grand jury indicted him on charges of conspiracy, fraud and obstruction of justice.
The government argued that Stanford was a flight risk and would likely flee the country rather than face jail for the rest of his life.
"The only way to reasonably assure the thousands of victims who lost billions of dollars that they will get their day in court is to detain Mr. Stanford," said Gregg Costa, an assistant U.S. attorney.
Costa painted Stanford as a callous jet-setter who had no qualms about wrongly taking the retirement and college funds of his investors. Instead, Stanford would spend the money to pay his monthly $100,000 American Express bill and fund his lavish lifestyle.
Prosecutors said that about $1 billion in investor deposits is still missing, which Stanford could possibly tap to fund a quick getaway.
Stanford's lawyer argued that the former chairman and sole shareholder of Stanford International Bank Ltd has deep roots in Texas and created thousands of jobs in the United States and Antigua with his many companies.
Stanford has demonstrated his willingness to answer the government's charges by offering to surrender three times, the lawyer said. "We wanted to show a track record of Mr. Stanford wanting to fight these charges," DeGuerin told the judge.
The courtroom was filled with Stanford's supporters, including his girlfriend, his estranged wife and at least four of his six children.
After the hearing, DeGuerin told reporters that he thought the hearing went well and he expected a fair decision from Hittner. Still, he said that the government's request for "an extremely high bond is just not fair" given the fact that the government had seized all of his clients' assets.
According to the U.S. Securities and Exchange Commission, Stanford, with the help of executives at his firm and a top Antigua and Barbuda financial regulator, ran a "massive Ponzi scheme" for over a decade that centered on certificates of deposit in his bank in Antigua.
Stanford says that he is innocent of the charges and that his multinational business was legitimate until the SEC "disemboweled" it by filing civil charges, which led to the confiscation of all his assets by a court-appointed receiver.
(Reporting by Anna Driver and Eileen O'Grady; Writing by Chris Baltimore; Editing by Gerald E. McCormick, Gary Hill)