Thursday PM August 27th, 2009

R. Allen Stanford hospitalized on day of hearing to change attorneys; Stanford's former CFO pleads guilty in alleged $7 billion ponzi scheme…Galveston faces higher electric rates…Retail gasoline prices continue sliding…

Texas financier R. Allen Stanford, jailed on charges of bilking investors out of $7 billion, is hospitalized today with an irregular heartbeat and high pulse. Stanford was to appear in federal court in Houston for a hearing on whether he can get a new attorney–but that’s now been postponed. Attorney Dick DeGuerin said that at about 5:30 a.m. Stanford was taken from the privately run prison in the Houston area to a hospital in Conroe with a high pulse rate. DeGuerin had no other information about Stanford’s condition. A spokeswoman for Conroe Regional Medical Center declined to release information about Stanford.

In the same Houston federal courtroom, the chief financial officer for Stanford Financial Group changed his plea to guilty for his role in the alleged $7 billion ponzi scheme. James M. Davis is cooperating with prosecutors and the guilty plea is part of a deal with the Justice Department, according to his attorney David Finn. Davis pleaded guilty this morning to mail fraud, conspiracy to commit mail, wire and securities fraud and conspiracy to obstruct a Securities and Exchange Commission investigation. Sentencing is set for November 20th and Davis faces up to 20 years in prison. But Geoffrey Corn with the South Texas College of Law says prosecutors could ask for delays.


“If they’re using the reward of supporting a downward departure from sentencing guidelines as the incentive for this guy to cooperate, they want to make sure they get everything out of him they need before he is sentenced. But, you know, there may be ways to do that before the other cases actually go to trial that they’ll be satisfied with, so based on everything that’s going on, the uncertainty as to who’s representing the main defendant, I think there’s a chance that would be delayed.”

Corn says Stanford’s current lawyer, Dick DeGuerin, has asked for permission to quit the case because he doesn’t have assurances he will be paid.


“One thing we don’t know for sure is whether or not the lawyers that are or will end up representing Stanford have been given access to everything that his chief financial officer is providing to the government. The truth is the government does not have to disclose that during plea negotiations. But that we know that Davis is a cooperative witness with the government, they’ve got to figure out what he’s telling them.”

Davis, Stanford and others are accused of advising clients to invest in certificates of deposit from the Stanford International Bank in the Caribbean island of Antigua.

Electric rates in Galveston County could be going up as utilities pay for Hurricane Ike-related repairs. CenterPoint Energy, Entergy and Texas-New Mexico Power all agreed to trim their original rate hike requests to state regulators after the September 13th, 2008 storm. The Galveston area took a direct hit from Ike, which swamped parts of the island and forced evacuations. The Galveston County Daily News reported that the power companies are seeking to cover the millions of dollars in damage Ike caused to power lines and poles. The rate hike proposals are before the Public Utility Commission in Austin.

The average retail price of gasoline across Texas dropped two cents to $2.49 a gallon this week. AAA Texas reported that prices are 14 cents higher than last month, but more than a dollar less than a year ago. Amarillo had the cheapest gasoline in the weekly survey, at $2.43 a gallon. El Paso had the most expensive price per gallon, at $2.58. AAA Texas spokesman Dan Ronan says motorists are paying the same prices they were in October 2005 when prices ranged between $2.59 and $2.63 a gallon. The association says nationwide gasoline prices remained unchanged from last week at $2.62.

The government says the number of newly laid-off workers filing claims for jobless benefits dropped last week, and the number of people remaining on the rolls also fell, evidence that layoffs have eased. Still, both figures remain above levels associated with a healthy economy, and analysts expect the unemployment rate to keep rising. The Labor Department said first-time unemployment claims fell to a seasonally-adjusted 570,000, down from an upwardly revised figure of 580,000 the previous week. Analysts expected a slightly larger drop to 565,000. The tally of those continuing to claim benefits dropped to 6.13 million from 6.25 million in the previous week, the lowest level since early April.

The government says the economy shrank at an annual rate of one per cent in the spring, a better-than-expected showing and more evidence that the recession is drawing to a close. The Commerce Department’s estimate for the change in the gross domestic product was unchanged from the initial figure it released last month. The drop, while representing a record fourth consecutive decline, was far smaller than the previous two quarters. It also was stronger than the 1.5 per cent decline that private economists expected. The new report found that businesses slashed their inventories more than first reported and cut back more sharply on investment in new plants and equipment. But those reductions were offset by revisions that showed smaller dips in consumer spending, exports and housing construction.

The head of the FDIC says there are no immediate plans to borrow money from the treasury department to shore up the shrinking deposit insurance fund. With bank failures surging, the Federal Deposit Insurance Corporation, says the insurance fund fell 20 per cent to $10.4 billion in the second quarter as U.S. banks overall lost $3.7 billion. Asked about a possibility of tapping the treasury, FDIC Chairman Sheila Bair says: “not at this point in time. I never say ‘never,’ but not at this point in time, no.” At the same time, Bair reaffirmed the likelihood of an additional fee on U.S. banks this year to help replenish the fund.

Tivo is suing AT&T and Verizon for patent infringement, including one covering the ability to pause and rewind live TV. The DVR maker is seeking damages for past infringement and a permanent injunction. Tivo CEO Tom Rogers says that while there are talks, “business agreements have not been reached.” Meanwhile, Tivo received a setback Wednesday in a similar patent lawsuit against Dish Network and sister firm EchoStar.

Many of those annoying prerecorded telemarketing calls will be history starting September 1st. The Federal Trade Commission said that it is banning these “robocalls” to consumers, unless the telemarketer has written permission from a customer that he or she wants to receive these calls. FTC Chairman Jon Leibowitz says American consumers have made it “crystal clear that few things annoy them more than the billions of commercial telemarketing robocalls they receive every year.” Violaters will face penalties of up to $16,000 per call. Exceptions include calls that deliver information such as flight cancellations and those from debt collectors, politicians, charities, banks, phone companies and others.

The Texas Women’s Empowerment Foundation hosts its International Financial & Leadership Summit Awards Gala this evening at the Houston Club on Rusk. The summit featured a financial workshop earlier today at the Federal Reserve Bank.

The Montgomery County Hispanic Chamber hosts its second Hispanic Business Forum at the Shenandoah Council chambers tomorrow morning. Providing government updates are Governor Rick Perry, as well as Congressman Kevin Brady, Senator Tommy Williams, Senator Robert Nichols and Representative Bandon Creighton.

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