Criminal case is high-stakes battle for Stanford

By Martha Graybow - Analysis

NEW YORK (Reuters) - For months, Texas tycoon Allen Stanford has vowed to fight accusations his financial empire was a vast fraud. But the stakes have gotten much higher now that he has been hit with criminal charges that could land him in prison for life if he is convicted.

The financier proclaimed his innocence through his lawyer again Friday, after being indicted on charges of fraud, conspiracy and obstruction. Prosecutors say he ran a $7 billion swindle at Stanford Financial Group that bilked investors throughout the United States and Latin America. [nN19424154]

Stanford, who already faces civil fraud charges, is confident a jury will find him not guilty of any crime, his lawyer said. A trial could be at least a year away, given the complexities of big business fraud cases, legal experts say.

The key to the government's case could be help from one of Stanford's chief lieutenants and former college roommate, ex-Chief Financial Officer James Davis.

Davis was charged with conspiracy Friday in a separate legal document typically used when a defendant has decided to plead guilty.

Davis' lawyer, who did not immediately respond to phone messages from Reuters seeking comment, has said previously that his client was cooperating with investigators probing the Stanford affair and expected to enter plea negotiations with federal prosecutors. [nN09299860]

Legal experts say that when a senior executive agrees to admit guilt and works with the government in bringing a case against his or her boss, the results can be devastating.

"Realistically with a CFO cooperating, that is not good news for Allen Stanford," said Robert McGahan, a partner at law firm Goodwin Procter LLP in Los Angeles and a former federal prosecutor. He is not involved in the Stanford case.