On Jan. 18, Senior U.S. District Judge David Hittner of Houston sentenced James M. Davis, the former chief financial officer of Stanford International Bank (SIB) and Houston’s Stanford Financial Group, to five years in prison in connection with an alleged conspiracy to defraud investors who bought about $7 billion in CDs sold through SIB.
Hittner also sentenced Davis, formerly of Mississippi, to three years of supervised release. Hittner imposed a “personal money judgment” of $1 billion against Davis, which the U.S. Attorney’s Office of the Southern District of Texas described in a press release as an “ongoing obligation for Davis to pay back criminal proceeds.”
Davis, 64, pleaded guilty in 2009 to three criminal charges in connection with the collapse of SIB – one count of conspiracy to commit mail, wire and securities fraud; one count of mail fraud; and one count of conspiracy to obstruct SEC proceedings.
He cooperated with the government in its criminal prosecution of R. Allen Stanford, former chairman of SFG, and other SFG executives.
In his sentencing memorandum filed on Jan. 18, Davis asked for a sentence of four years in prison and two years of supervised release. On Jan. 16, in a motion for downward departure and sentencing memorandum, the government asked Hittner to sentence Davis to 10 years in prison.
Davis’ criminal defense attorney, David Finn, says the Davis’ five-year sentence is fair “based on his lack of criminal history” and because he cooperated with the government and testified at two criminal trials against SFG defendants.
“He came clean,” Finn, of David Finn PC in Dallas, says. “He spilled his guts. He’s continued to give the unvarnished skinny, the unvarnished truth.”
Jason Varnado, an assistant U.S. attorney in the Southern District of Texas, declines comment on the sentence because of a gag order in the related Stanford criminal case. However, he says he asked Hittner in court on Jan. 22 to give Davis a sentence that rewards his cooperation but also deters Davis and others in a similar situation from future criminal conduct.
In its motion for downward departure, the government argued: “The government believes a 10-year sentence strikes the right balance of recognizing both the seriousness of Davis’ role in the crimes he committed and his substantial assistance to authorities.”
In a plea agreement Davis signed in 2009, he agreed to cooperate with the government in its investigation of the alleged $7 billion conspiracy to defraud. As part of the plea deal, he agreed to the $1 billion forfeiture judgment.
Finn says Davis is “flat broke.”
“The government took everything, rightfully so…years ago,” he says.
Hittner gave Davis, who is out on bond, 60 days to voluntarily surrender, Finn says.
In June 2012, calling it “one of the most egregious frauds” to ever be presented to a jury, Hittner sentenced R. Allen Stanford, the former chairman of Houston’s SFG, to 110 years in prison. In March 2012, a federal court jury found Stanford guilty of 13 of 14 criminal counts against him.
―by Brenda Sapino Jeffreys