By Eileen O'Grady and Bruce Nichols
HOUSTON (Reuters) - A federal judge on Tuesday ordered Texas financier Allen Stanford, accused of a $7 billion (4.2 billion pound) fraud, held without bail until trial.
U.S. prosecutors had argued that Stanford, who faces life in prison if convicted on all charges contained in a 21-count indictment, had the means and motive to flee.
"The court determines that Stanford is a serious flight risk and there is no condition or combination of conditions or pretrial release that would reasonably assure his appearance," U.S. District Judge David Hittner said in an order that revokes a $500,000 bond that a magistrate had granted Stanford on Thursday.
Stanford, who spent the last 15 years living in the Caribbean where he was knighted by the Antiguan government, had a network of wealthy associates and had at least two passports, prosecutors told Hittner at hearing on Monday.
"We are very disappointed and we are going to appeal to the 5th Circuit," Dick DeGuerin, Stanford's lawyer said in a statement.
The billionaire, who is more accustomed to jetting around the globe in private aircraft, has been in custody since his arrest on June 18 in Virginia. He is currently being held in a federal detention centre 40 miles north of Houston.
Hittner has recent experience with a white-collar criminal jumping bond. Harris "Butch" Ballow, who pleaded guilty after being charged with fraud in 2002, failed to show for sentencing. Hittner held a status conference on Ballow's whereabouts in April, court records show.
The judge's decision to detain Stanford was characterized as unusual, lawyers said.
"In the federal judicial system, it's standard for white- collar crime defendants to be released on bond," said Houston attorney Chris Bebel, a former federal prosecutor who has done white collar criminal defence work and specializes in securities law.
MINDFUL OF MADOFF
Another attorney said he would not be surprised to see the 5th Circuit Court of Appeals in New Orleans overturn Hittner's ruling. Still, Jacob Frenkel, a former federal prosecutor said the appeals court is "fully mindful of the public outrage that attached to Bernard Madoff receiving bail."
Madoff, who was sentenced to 150 years in prison for a $65 billion investment fraud on Monday, was initially granted bail, but was unable to post it. He ended up under house arrest in his penthouse apartment.
DeGuerin had argued that a court-ordered freeze of Stanford's assets had left his client broke, with no funds for an escape. He also told the court Stanford tried to surrender to authorities three times, proof he was willing to stand trial on the government's charges.
The start of Stanford's trial is tentatively scheduled for August 25, but that date likely will be changed. DeGuerin told a judge last week it would take at least a year to prepare for the trial, which involves documents and investors in the United States, Europe, the Caribbean and Latin America.
The government accuses Stanford of leading a massive Ponzi scheme using the investor funds from certificates of deposit issued by his bank in Antigua.
Stanford sought to avoid detection by creating false accounting records, lying to investors and bribing a regulatory official in Antigua, according to prosecutors.
"It's appropriate, it's very much appropriate given the severity of the charges," said Angela Shaw, who says her family lost $2 million in Stanford investments. Shaw heads up a coalition of 2,500 Stanford clients who lost money.
Also on Tuesday, Britain froze $100 million linked to Stanford within five hours of a request from the United States Department of Justice, the Serious Fraud Office said.
The case, filed in federal court in Houston, is United States of America v. Robert Allen Stanford H-09-342.
(Reporting by Eileen O'Grady and Bruce Nichols; additional reporting by Erwin Seba in Houston; writing by Anna Driver; editing by Gary Hill and Andre Grenon)