Attorney Larry Campagna testified that he assisted Allen Stanford in disputes with the IRS regarding loans to Stanford and his companies from Stanford International Bank between 1999 and 2003.
Campagna said the IRS flip-flopped on whether these were, in fact, loans. He said, in 1999, the IRS took the position that money for Stanford’s other companies were valid loans. In 2000 and 2001, though, Campagna said the IRS treated them as dividend payments, subject to taxation. He said the IRS always treated the personal loans to Stanford as loans.
On cross-examination, Campagna said the audits dealt only with whether the information in Stanford’s tax returns was accurate. It did not touch on whether the assets of the bank were being accurately reported to depositors.
Stanford himself looked haggard and was coughing throughout much of the day. Judge David Hittner called an early end to the day’s testimony, saying one of the participants was “under the weather” and that medical personnel were standing by.