VOL. 125 | NO. 30 | Monday, February 15, 2010
Judge Acquits 2 Ex-Stanford Employees
CURT ANDERSON | AP Legal Affairs Writer
MIAMI (AP) - Citing weak evidence, a federal judge on Friday acquitted two former employees of fallen financier Allen Stanford on charges they illegally shredded thousands of company documents to hinder the federal probe into an alleged $7 billion Ponzi scheme.
After a nearly two-week trial and two days of jury deliberations, U.S. District Judge Richard W. Goldberg issued not guilty verdicts for Thomas Raffanello, Stanford Financial Group's ex-security chief and also a former top U.S. Drug Enforcement Administration agent, and technology officer Bruce Perraud.
On the key issue of whether the men intended to commit a crime, Goldberg said, "the evidence is substantially lacking."
Raffanello and Perraud faced up to 50 years each behind bars if convicted of conspiracy, obstruction of a Securities and Exchange Commission investigation and two related counts stemming from the document destruction on Feb. 25, 2009, just as Stanford's global banking empire was imploding and federal agents were seizing its assets.
A federal judge in Texas a week earlier had ordered all Stanford records preserved for a court-appointed receiver, and testimony showed that Perraud initially halted the shredding plan. But Raffanello directed it to go forward because all the documents were duplicated on company computers, which defense attorneys said were made available to the SEC and other investigators.
"No one tried to hide anything from anyone," said Perraud attorney Ed Shohat in closing arguments.
Goldberg had earlier called the prosecution's case "thin" but allowed a 12-person jury to begin deliberations. When jurors sent out a pair of notes indicating confusion about the case, the judge used his authority to decide the case on his own – over prosecutors' objections.
Goldberg said the acquittal couldn't be appealed.
A relieved Raffanello, wearing a DEA lapel pin, hugged family members and supporters outside the courtroom.
"I believe in America. I believed this system would have the right result, and it did," said Raffanello, who ran the Miami field office – one of the DEA's biggest – and worked on the prosecutions of former Panamanian dictator Manuel Noriega and Medellin cartel baron Fabio Ochoa.
Perraud said it's time for him to start looking for a new job.
"This takes an enormous load off us. You can't imagine what the last year's been like," Perraud said.
Once one of the world's richest men, Stanford is now awaiting trial in Houston on charges of operating a Ponzi scheme through his bank on the Caribbean island of Antigua. Investigators say he used certificates of deposit that supposedly paid double market rates to bilk thousands of investors out of $7 billion, using money from new investors to pay off older ones in a typical Ponzi structure.
The acquittals in Miami have no direct bearing on the main case against Stanford.
Stanford's seven-person Fort Lauderdale security office ferreted out information about investors, did background checks on Stanford employees, worked with security contacts in foreign countries, checked on Stanford properties and his companies and kept business travel records by company executives. Testimony showed these formed the bulk of the shredded documents, which didn't include financial documents.
Prosecutors said the court's preservation order was crystal clear and that the SEC could not rely on Raffanello's assurances that all his office's work was stored on a computer server – even though the SEC has still not gone through the server, according to trial testimony.
"We don't know all of what they did destroy," Jack Patrick, a senior Justice Department litigator, said earlier. "The documents that were destroyed were certainly not garbage."
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