Allen Stanford was convicted on Tuesday of running a $7 billion Ponzi scheme, a verdict that caps a riches-to-rags trajectory for the former Texas financier and Caribbean playboy.

<div class="articleSpanImage" style="width: 600px; margin-bottom: 8px; color: #333333; font-family: georgia, 'times new roman', times, serif; font-size: 10px; line-height: 15px; text-align: left; background-color: #ffffff;"><span><img alt="" border="0" height="330" src="http://graphics8.nytimes.com/images/2012/03/07/business/07stanford/07stanford-articleLarge.jpg" width="600" /><div class="credit" style="font-family: arial, helvetica, sans-serif; font-size: 0.9em; line-height: 1.223em; text-align: right; color: #909090; margin-bottom: 3px;">Aaron M. Sprecher/Bloomberg News</div><p class="caption" style="font-size: 1.1em; line-height: 1.2727em; font-family: arial, helvetica, sans-serif; color: #666666; margin: 0px;"><span class="focusParagraph" style="color: #000000; font-family: arial, helvetica, sans; line-height: normal; text-align: -webkit-auto; font-size: medium;"><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 20px; line-height: 1.5; padding: 0px;"> </p></span><span id="midArticle_1" style="color: #000000; font-family: arial, helvetica, sans; line-height: normal; text-align: -webkit-auto; font-size: medium;"> </span><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">It was a vindication for the U.S. government, which closed down Stanford's financial empire in February 2009 but had failed for years to address signs that the business was built on air. The Stanford case was the biggest investment fraud since Bernard Madoff's.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">Stanford was found guilty on 13 counts of a 14-count criminal indictment, including fraud, conspiracy and obstructing an investigation by the U.S. Securities and Exchange Commission. He was found not guilty on one count of wire fraud. The charges carry a possible prison sentence of nearly 20 years.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">As Stanford, 61, was led out of the courtroom after the verdict, he touched his fist to his heart and looked at the bench where his mother and two daughters sat. He has been jailed since his June 2009 arrest.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">"We're disappointed in the outcome," said Stanford's defense attorney Ali Fazel. "We do expect an appeal." He said he expects sentencing in several months.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">The verdict came less than a day after the Houston federal jury said it could not reach a decision, and U.S. District Judge David Hittner instructed jurors to keep deliberating.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">Still, the verdict may prove only a moral victory for Stanford's victims. Most have received none of the money back they invested in Stanford's certificates of deposit.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">"For all the investors I think there is a sense of relief that they weren't just fools," said Cassie Wilkinson, a Houston investor in Stanford funds who attended the six-week trial. "There was a jury of 12 people who found the same thing - that we were just conned."</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">Stanford's unraveling was one of the most closely watched fraud cases since Madoff's. Madoff, 73, pleaded guilty in 2009 to orchestrating what prosecutors have called a $64.8 billion Ponzi scheme. He is serving a 150-year prison sentence.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">The guilty verdict did not end the case. The jury of eight men and four women, including a pawn shop operator and a retired hairdresser, returned to the courtroom on Tuesday afternoon to consider the government's demand that more than $300 million in assets tied to Stanford be forfeited.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">The money, which has been frozen, is held in more than 30 bank accounts in Geneva, the United Kingdom and Canada in the names of Stanford and other entities, according to the government. Stanford, wearing a navy blue suit, also was back in the courtroom to hear the testimony in the forfeiture case.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">"Every single dollar that the U.S. is seeking to forfeit is CD depositor money that stems from Mr. Stanford's crimes and belongs to the victims of his crimes," prosecutor Andrew Warren said in opening statements.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">'PERSONAL ATM'</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">Stanford's personal fortune was once valued at $2.2 billion.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">At trial, prosecutors told how he repeatedly raided the bank he owned in Antigua, Stanford International Bank, using it as his "personal ATM."</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">He bought a castle in Florida for one of his girlfriends and his oldest daughter lived in a million-dollar condominium in Houston. He wore custom-made suits, lived in luxury homes and on a yacht in the Caribbean and bankrolled a $20 million prize for an international cricket tournament.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">The government's star witness, former Stanford aide James Davis, testified that he and Stanford faked documents and made up financial reports to calm investors and fool regulators. They funneled millions of dollars from Stanford International Bank to a secret Swiss bank account that Stanford tapped for his personal use, Davis testified.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">Davis, 63, has pleaded guilty to three criminal counts.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">Stanford's lawyers portrayed their client as a visionary who was not involved in his firm's daily activities. They blamed Davis for any fraud and argued that Stanford's businesses were viable until the government shut down Stanford Financial Group in Houston in February 2009. Left with no money, Stanford was declared indigent by the court and his defense was paid for with public funds.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">Wendell Odom, a criminal defense attorney in Houston who observed much of the trial, said Stanford's attorneys did a good job of discrediting Davis by getting him to admit to being a liar. But they failed to develop an alternative theme for the jury. "There was just too much evidence," he said.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">BRAIN INJURY</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">While in jail awaiting trial, Stanford was beaten by another inmate, leaving him with a brain injury and broken bones in his face. He then became addicted to an anti-anxiety medication. His lawyers argued that those events caused him to lose his memory, making him incompetent to stand trial.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">After eight months at a prison hospital in North Carolina, he was deemed competent to stand trial. Before his trial began on January 23, Stanford's lawyers said their client wanted to tell his story to the jury, raising the possibility that he would take the stand. Ultimately, he did not testify.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">Stanford grew up in Mexia, Texas. He studied <a href="http://www.reuters.com/finance" style="color: #006e97; text-decoration: none; cursor: pointer; outline-style: none; outline-width: initial; outline-color: initial;" title="Full coverage of finance">finance</a> at Baylor University, where Davis, who later become chief financial officer of Stanford Financial Group, was his roommate.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">In the 1980s, Stanford bought up real estate in Houston with his father, later selling it at a profit. In 1986, he opened an offshore bank on the Caribbean island of Montserrat and, after banking regulations there tightened, he moved his operation to Antigua.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">The bank specialized in aggressively selling certificates of deposit to wealthy people, his former employees testified at the trial. They targeted clients in Latin America, especially <span style="color: #006e97;"><span style="cursor: pointer; outline-width: initial; outline-color: initial;">Venez</span></span><a href="http://www.reuters.com/places/venezuela" style="color: #006e97; text-decoration: none; cursor: pointer; outline-style: none; outline-width: initial; outline-color: initial;" title="Full coverage of Venezuela">uela</a>, and oil company workers with fat pensions who lived along the U.S. Gulf Coast.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">In Antigua, he became a philanthropist and sponsor of cricket, the national sport, and was known as "Sir Allen" after being knighted there in 2006. By 2008, Stanford made No. 205 on Forbes magazine's list of the wealthiest Americans.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">But questions surfaced about how Stanford International Bank's CDs could persistently pay above market rates. By February 2009, investors were trying to withdraw their money and, on February 17 of that year, the government descended on his headquarters in Houston and shut it down.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; font-size: 14px; line-height: 1.6; color: #000000; font-family: arial, helvetica, sans; text-align: -webkit-auto; padding: 0px;">Antigua stripped him of his knighthood and seized his local assets.</p></p></span></div>

Allen Stanford was convicted on Tuesday of running a $7 billion Ponzi scheme, a verdict that caps a riches-to-rags trajectory for the former Texas financier and Caribbean playboy.

Aaron M. Sprecher/Bloomberg News     It was a vindication for the U.S. government, which closed down Stanford's financial empire in Febr...

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