James M. Davis, the former chief executive officer for Stanford Financial Group and Stanford International Bank Ltd., pleaded not guilty on July 13 to federal criminal charges related to an alleged $7 billion conspiracy to defraud, but that plea was a formality, his attorney says. Davis’ lawyer, David Finn (pictured), a partner in Milner & Finn in Dallas, says his client, who is out on a bond, has already signed a plea agreement and will plead guilty to three charges against him after the government has time to contact potential victims of the alleged conspiracy under the Justice for All Act Using Reasonable Alternative Measures. On July 14, the U.S. Department of Justice launched a Web site inviting people to comment on Davis’ plea deal by July 31. The Web site also includes a link to Davis’ plea agreement, which he signed on April 21. In the plea agreement, Davis admits that the U.S. government could prove at trial that his participation in the “conspiracy and scheme and artifice” resulted in a loss of more than $400 million, and his offense involved more than 250 victims. He also promised in the agreement to assist the United States in its investigation. At a hearing in federal court in Houston on July 13, U.S. Magistrate Judge Calvin Botley set Davis’ bond at $500,000. In an information unsealed on June 19, Davis, who has been cooperating with federal authorities in the Stanford investigation, is charged with one count of conspiracy to commit mail, wire and securities fraud; one count of mail fraud; and one count of conspiracy to obstruct and SEC investigation. “We have actively cooperated for months. We went to the DOJ and SEC and FBI over three months ago,” Finn says. “He wanted to do the right thing. The very first time I met with Mr. Davis in my office, it was clear he wanted to tell the truth.” Also on June 19, several other individuals, including R. Allen Stanford, chairman of Houston-based Stanford Financial Group, pleaded not guilty to criminal charges. The plea deal does not include a sentencing recommendation from prosecutors, but Davis faces up to 30 years in prison on the three counts. Gregg Costa, an assistant U.S. attorney in the Southern District of Texas who is the lead prosecutor on the case, declines comment. U.S. District Judge David Hittner of Houston scheduled a hearing on Aug. 6 for Davis to change his plea.
-- Brenda Sapino Jeffrey


