Saturday, February 4, 2012

Stanford Trial: Two Friends Become Enemies

The NY Times discusses how the trial regarding the alleged Ponzi scheme run by R. Allen Stanford will pit Stanford against his long-time friend and CFO of Stanford Financial Group before it collapsed, James M. Davis. It's a classic example of the Prisoner's Dilemma. Here are some excerpts:
Mr. now the chief prosecution witness against Mr. Stanford. He will testify that he witnessed and participated in a $7 billion Ponzi scheme set in motion and directed by Mr. Stanford from a bank on the island of Antigua.
“It’s very similar to an organized crime or Mafia case,” said Adam Gershowitz, a professor of criminal law at the University of Houston, “where you have friends who go back years and have worked together for years and one turns on the other to save his own skin.”
Mr. Stanford’s lawyers have already told the jury that Mr. Davis’s story is a lie. ...The case could well come down to who the jury decides was really the mastermind of what prosecutors described as an international crime that defrauded nearly 30,000 investors from 113 countries over more than 20 years and corrupted the highest levels of the government of Antigua.
Mr. Stanford and Mr. Davis always made an odd couple. Mr. Stanford was known to have a fiery temper, to berate employees and occasionally to throw glass ashtrays at meetings. He had multiple mistresses and spent lavishly on them, on his cricket team and stadium, and he had a taste for mansions, yachts and private jets.
Mr. Davis was known by employees as soft-spoken and gentlemanly, an executive who was quick to give a congratulatory hug and who opened business meetings with prayers. His passion outside of work was to teach Sunday school at a Baptist church in Baldwyn, Miss.

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