Allen Stanford Criminal Trial Transcript Volume 5 Jan. 27, 2012

8/3/2019 Allen Stanford Criminal Trial Transcript Volume 5 Jan. 27, 2012

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Johnny C. Sanchez, RMR, CRR - [email protected]

1255

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

UNITED STATES OF AMERICA * 09-CR-342* Houston, Texas

VS. ** January 27, 2012

ROBERT ALLEN STANFORD * 10:06 a.m.

JURY TRIAL

VOLUME 5

BEFORE THE HONORABLE DAVID HITTNER

UNITED STATES DISTRICT JUDGE

APPEARANCES: APPEARANCES:

FOR THE GOVERNMENT:Gregg J. CostaAssistant US AttorneyPO Box 61129Houston, Texas 77208-1129

William StellmachAndrew Howard WarrenU.S. Department of Justice1400 New York Avenue NWWashington, DC 20005

FOR THE DEFENDANT:Ali R. FazelRobert Scardino

Scardino & Fazel1004 Congress Street3rd FloorHouston, Texas 77002


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1256

A P P E A R A N C E S: (Continued)

FOR THE DEFENDANT: (Continued)John M. ParrasAttorney at Law1018 PrestonFloor 2Houston, Texas 77002

Kenneth W. McGuireMcGuire Law FirmPO Box 79535Houston, Texas 77279

Court Reporter:Johnny C. Sanchez, RPR, RMR, CRR515 Rusk, #8016Houston, Texas 77002713.250.5581

Proceedings recorded by mechanical stenography. Transcriptproduced by computer-assisted transcription.


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1257

I N D E X

WITNESS

JASON GREEN

CROSS-EXAMINATION BY MR. FAZEL................. 1262

REDIRECT EXAMINATION MR. STELLMACH............. 1410

RECROSS EXAMINATION BY MR. FAZEL............... 1430

REDIRECT EXAMINATION MR. STELLMACH............. 1436

JOSEPH FLYNN

DIRECT EXAMINATION BY MR. WARREN............... 1446

CROSS EXAMINATION BY MR. MCGUIRE............... 1478

REDIRECT EXAMINATION BY MR. WARREN............. 1509

RECROSS EXAMINATION BY MR. MCGUIRE............. 1515

MARK PAUL COLLINSWORTH

DIRECT EXAMINATION BY MR. WARREN............... 1519VOIR DIRE EXAMINATION BY MR. FAZEL............. 1547


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THE COURT: Hang on one second. We have one

juror inquiry. So just stand at ease, please, or sit at

ease.

Let me see the attorneys up here.

Everybody have a seat for a moment.

(The following was held at the bench)

THE COURT: Okay. Two of the jurors have

mentioned that a lady in the back was sleeping. Okay. Two

of the jurors have mentioned that.

MR. FAZEL: One of the jurors was sleeping?

THE COURT: Oh, yes.

What number is that, Ellen?

CASE MANAGER: Juror Number 11.

THE COURT: 11. The older woman in the back.

I've noticed it. I mean, I've been -- you know, while you

are in the pit, I always watch the jurors. And she is

sleeping. And we just asked -- and two of the jurors

mentioned it to Ellen, because they, you know, are working.

And we just mentioned it to the lady and

said I could put her like we did with Mr. James, years ago

in the bribery trial, we put him on the end, that he could

get up -- he had back problems -- and he could walk around

a little bit and sit down. But she just said she doesn't

think that would help. She's always had problems with it.

Thanks a lot for not telling us.


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So if you want to do anything, fine; if

you don't, I'll leave her on there and have that in state

court. Do you want to talk about it?

MR. COSTA: We would like to talk about it.

THE COURT: Okay.

MR. FAZEL: Maybe after lunch.

THE COURT: You want to go for the morning and

come back to this thing?

MR. COSTA: Yes.

MR. FAZEL: Judge, there's one other thing, if

the Court is done.

THE COURT: Go on.

MR. FAZEL: There's one other thing. There's

three exhibits that I tendered to the government today.

Originally we had no exhibits for Green. And we went back

and forth. I sent an e-mail to Mr. Costa. And then I

said, "Well, wait a minute. There might be one." And then

I said, "No, there isn't one."

After the direct examination, there was

some mention about insurance, and so that prompted us to

find some documents that we think are relevant and would

like to cross-examine Mr. Green with.

And I will be very frank with you, given

the circumstances, Your Honor, we haven't turned those over

yet. These are things that they produced to us. It's not


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stuff that we came up on our own, but these are things that

we did not say --

MR. STELLMACH: Well, I don't see a Bates

number on here indicating they produced them.

THE COURT: When is he -- do you have some more

time on it?

MR. FAZEL: I'm on it.

MR. STELLMACH: He's on cross.

THE COURT: Oh, he's on cross. Okay. That's

right.

MR. STELLMACH: So, Your Honor, we would object

to these documents coming in. We're getting them literally

in the middle of the cross-examination. This is typical of

the problem we've had with documents.

THE COURT: Let's see what you've got.

MR. STELLMACH: They purport to be documents

from insurance brokers stating that they located insurance

for Stanford International Bank.

THE COURT: Does he know about this?

MR. FAZEL: That's why I was going to ask him

about it.

The other issue is just like anything else

in trial, Your Honor, there's always -- they sent us

exhibits yesterday saying this is going to be an amended

exhibit or something. I understand --


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MR. STELLMACH: Two weeks from now.

MR. FAZEL: No, I understand that. I

appreciate that. I'm not saying we're perfect.

THE COURT: One ruling at a time. See if he

recognizes it or tell the government it's the last time

we'll put up with it, okay? This is Friday. They have the

whole weekend. Monday is a whole new ball game, okay? But

let's be flexible today. I understand your position.

MR. STELLMACH: As long as we're on the same

page, that's the exception we're going to make.

THE COURT: Well, unless it's something that's

purely rebuttal, it came out of left field. This could

have been anticipated. We understand that. But they have

this problem, and now they know what sequence it is.

Monday will be a different ball game.

MR. STELLMACH: Thank you, Your Honor.

THE COURT: All right. Please call the jury

in, please.

THE COURT: Ellen, is everything on here? All

the camera?

(The following was held before the jury)

THE COURT: Thank you. Be seated.

Good morning. We're ready to proceed. I

think Mr. Fazel is up.

Go right ahead.


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Cross-Green-By Mr. Fazel


1262

MR. FAZEL: Thank you, Your Honor.

JASON GREEN

CROSS-EXAMINATION

BY MR. FAZEL:

Q. Good morning, Mr. Green.

A. Good morning.

Q. I just wanted to kind of summarize what we discussed

yesterday. Since we left off at a particular place

yesterday, I want for a kind of bring you up to where we

are and then we can go from there; okay?

A. Okay.

Q. And just like I discussed with you yesterday, if I go

too fast, if you don't understand a question, let me know

and I'll repeat myself.

A. Yes, sir.

Q. And if you don't know the answer to a question, just

say, I don't know.

A. Okay.

Q. Fair enough?

A. Fair enough.

Q. Okay. Great. Mr. Green, we talked about you joining

the had Stanford companies, and we talked about your

salary being $70,000 and a bonus of $10,000.

Do you remember that discussion?

A. That was my initially bonus, yes.


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Q. And you found that to be perfectly normal within

industry norms; correct?

A. Yes.

Q. Okay. And then we talked about what you did

originally for the company, that you developed a type of

investment model.

Do you remember that testimony?

A. Financial plans.

Q. I'm sorry. Financial planning.

A. Yes.

Q. And basically, you -- perhaps yourself or you and

other people put together a criteria for financial

advisors to speak to their clients about, about what would

about a good opportunity for them to invest in and what

they needed, and then make those investments as necessary?

A. That -- that wasn't my role per se.

Q. Okay.

A. Mine was -- there were other people perhaps that did

that, but my role was to do financial plans, which was, if

someone wanted to plan for retirement, education funding,

estate planning, I would do analysis and then deliver that

to the advisors.

Q. I see.

A. So I wasn't getting involved per se in the investment

piece of it at that stage of the game.


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Q. But you made recommendations as to what they should

invest in?

A. I don't recall my plans being as detailed as that.

It may have been more general asset allocation. Because

one of the things is we wanted to leave that to the

brokers as opposed to, you know, me as one financial

planner trying to dictate to every broker how they should

invest their client funds.

Q. I understand. And -- well, the point of the matter

is that your -- what you were doing is trying to determine

what individuals needed and then apply whatever they

needed to come up with a plan for them individually.

Would that be fair?

A. Yes, that would.

Q. You and your group; correct?

A. Right, yeah.

Q. And then you remember we talked about what's behind

you, which was the way -- let me pull that out of the way.

And I want to go through this quickly

because we talked about this yesterday.

A. Sure.

Q. But we talked about the fact that SIBL was the bank;

correct?

A. Correct.

Q. And Stanford International Bank, Limited --


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A. Right.

Q. -- had an agreement with SGC?

A. Yes.

Q. And you came on board to SGC at its inception, when

it was born; correct?

A. Right.

Q. Right about that time?

A. Yes, yeah.

Q. And we talked about how this was set up so that SIBL

and SGC had some kind of a contractual agreement; correct?

A. Yes.

Q. And that's disclosed in the disclosure statement.

Do you remember that?

A. Yes.

Q. Okay. And we'll talk about that a little bit later.

A. Okay.

Q. And that SGC would sell CDs for SIBL.


A. Yes.

Q. Okay. And then we talked about the fact that even

though that contractual agreement was in effect that was

just a portion of the business for SGC.


A. Yes.

Q. As a matter of fact, we talked about how SGC had


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under management over maybe 10 billion, but maybe more

than $10 billion worth of assets; correct?

A. Correct.

Q. And only small portion of that -- and we said about

30 percent, and this is not exact science -- but

approximately 30 percent, maybe more, maybe less?

A. Yeah. I've been thinking --

THE COURT: Hold it. One at a time, please.

THE WITNESS: Okay. I'm sorry.

BY MR. FAZEL:

Q. Maybe more, maybe less were CDs.


A. Yes, I do.

Q. Okay. All right. Let's move on.

THE WITNESS: Your Honor, may I add a point

about that?

THE COURT: Yes. Go on.

THE WITNESS: There were international advisors

that weren't under my group, and I think they also did CDs

through the broker dealer. So I've been thinking I -- that

number may have been as high as $5 billion through the

broker dealer. I'm not sure.

BY MR. FAZEL:

Q. You mean that --

A. The 30 percent down here, could have been as much as


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50 percent perhaps.

Q. Okay. But you just don't know?

A. I wouldn't know.

Q. Okay.

A. The group I was responsible for, my guess, best

guess, was it was about $3 billion or 30 percent.

Q. And I guess the point is, we don't know -- we don't

have any information -- or you don't have any information

how much CDs were sold in the other banks or what their

production rates were or anything like that?

A. Well, they had groups that would have gone through my

company, Stanford Group Company --

Q. Right.

A. -- but some of the international advisors, that

business may have run through Stanford Group Company, and

I'm fairly certain it was for some period of time, but I'm

not privy to all those numbers. So I can't speak for the

whole broker dealer is my point.

Q. Okay. And I completely understand that.

A. Okay.

Q. And what we're asking is what you know personally.

A. I know. I'm just trying to be as accurate as I can.

Q. And please be that way.

A. Yes.

Q. And there's nothing wrong with that.


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A. Right.

Q. But you personally speaking, let's focus in on the

U.S.

A. Okay.

Q. And if you need to clarify, then, just do like you

did.

A. Right.

Q. Fair enough?

A. Okay. Sure.

Q. But to your knowledge, as far as you know, that

30 percent was about right as far as your group was

concerned? How about that?

A. Yes.

Q. Fair?

A. Yes.

Q. Okay. The point being that there were a lot of other

assets under management other than the CD product?

A. Yes.

Q. And these assets ran the gambit from equity to debt

to all sorts of municipal bonds, U.S. Treasury. It was

anything the individual needed, any financial asset that

the individual needed, was available for them to purchase

through Stanford Group Company --

A. Yes.

Q. -- the broker dealer?


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A. That's correct.

Q. Okay. Now, you also -- excuse me.

You also did other things for Stanford in

the beginning as well. For example, did you not introduce

Mr. -- is it Grossbeck?

A. Yes.

Q. And you thought that he would be a good fit in SGC

for doing what?

A. Replacing me as the director of financial planning.

Q. Okay. So you were not only involved in financial

planning for Stanford International Group, but you also

recommended other people for come in and do things for

Stanford that you thought were worthy, were qualified to

do what they needed to be done; correct?

A. Yes.

Q. I mean, after all, you wouldn't recommend somebody

for Stanford if you didn't think they were qualified,

would you?

A. That's correct.

Q. You wouldn't recommend somebody for Stanford if you

thought that they were in some way committing fraud, would

you?

A. Of course not.

Q. Of course not. So when you recommend people to work

at Stanford, you believed in them and thought they were


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1270

going to do a yeoman's job, they were going to do a good

job?

A. Absolutely.

Q. All right. At some point in time, you became a

branch manager.

Do you remember talking about that?

A. Yes, uh-huh.

Q. Okay. And even though you were a branch manager, my

understanding and correct me if I'm wrong, you wanted to

continue to have your own portfolio of clients; correct?

A. That's correct.

Q. In other words, to make that clear to the jury, what

we're talking about here is that you were managing people

under you, people who sold securities and were financial

advisors; correct?

A. Correct.

Q. And at the same time, you had your own individual

clients that you helped and sold securities or put

portfolios together for; correct?

A. Right. That's known as a producing manager.

Q. A producing manager.

A. Yes, sir.

Q. And again, the idea is to produce -- I mean, that's

the whole idea of the industry is to produce, is to get

people involved, to get people in the door, to get people


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1271

do business with you; correct?

A. Yes.

Q. Is there anything illegal about that?

A. No.

Q. Is there anything fraudulent about that?

A. No.

Q. Okay. Stanford company -- we talked -- we barely

touched on this yesterday. Stanford companies were not

just one or two companies; correct?

A. That's correct.

Q. There were a lot of them; correct?

A. Yes.

Q. Can you give us an estimate in your mind of how many

companies there were?

A. You know, it varied; but at one time, 75 is a number

that sticks out in my head, maybe as many as 75 different

affiliated companies. It could have been --

Q. Over a hundred maybe?

A. No, I don't think so.

Q. Okay.

A. No. Yeah.

Q. And all these companies were somehow, in some way,

interrelated.

Would you agree with that?

A. Yes.


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Q. Anything illegal about that?

A. No.

Q. Anything about that that caused you concern?

A. No.

Q. Okay. And each company helped the other company out

by providing business, providing resources; is that

correct?

A. Yes.

Q. Is there anything wrong about that?

A. No.

Q. It's actually a very interesting business model,

isn't it?

A. Yes.

Q. It is.

By having each company feed the other

company and assist the other company; correct?

A. Correct.

Q. All right. You also -- I don't think we talked about

this yesterday, but you also suggested another person, a

J.D. Perry.

Do you remember him?

A. Yes.

Q. What did you suggest him for?

A. To run a trust company. We had bought a trust

charter in Louisiana, and I suggested him to be the


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1273

president of the trust company.


A. No.

Q. As a matter of fact, you were on the board of that

trust company, were you not?

A. Yes, I was.


A. No.

Q. Anything fraudulent about that?

A. No.

Q. Anything you felt like, Umm, I don't like this, we

shouldn't do this?

A. No.

Q. Because if there was, you wouldn't have suggested

Mr. Perry join the group, would you?

A. Correct.

All right.

MR. FAZEL: Excuse me, Judge. I'm sorry.

BY MR. FAZEL:

Q. I'm sorry, Mr. Green.

A. That's okay.

Q. Now, at some point right before we left, we talked

about what Mr. Stanford did and what Mr. Davis did.


A. Yes.


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Q. Okay. This is not an art; this is a science.

A. Okay.

Q. Nobody -- I mean, if you don't know the answers to

these things, just tell me you don't know.

A. Okay.

Q. I'm sorry. It's the other way around.

A. If I don't know the answer, then I don't know; right?

Q. This is not science; this is art.

Okay. Now, it is clear to you, is it not,

sir, that Mr. Davis ran Memphis; correct?

A. He ran a portion of Memphis, correct.

Q. Who ran the other portion?

A. Well, we had a broker dealer presence there that was

run by Scott Notowich.

Q. But Mr. Davis ran the investment arm of the Memphis;

is that correct?

A. Ultimately, yes. That -- they all reported up to

him.

Q. Okay. Now, are you familiar with the methodology and

the accounting practices of Stanford?

Do you want me to clear that question up a

little bit?

A. Yeah, because there's, you know, various entities.

Q. Do you know how the numbers were reported to the

accounting section of Stanford to be then produced in the


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marketing departments and given out?

A. I do not.

Q. Do you know a Mr. Kuhrt?

A. I know his -- yes, I know of him, yes.

Q. Do you know Mr. Lopez?

A. Yes. I know of him, yes.

Q. Are you familiar with the? Did you have a lot of

interaction with them?

A. No, not a lot. I mean, I'd see them at functions and

informal interaction.

Q. Okay. Would it be fair to say then, sir, that your

main job at Stanford was to market and sell the products

that Stanford offered?

A. Yes. I would have phrased it maybe a little

differently, but yes, essentially.

Q. Okay. And is it fair to say that the number

crunching, the investment part of it, was handled by

another section at Stanford; correct?

A. Well, number crunching, are you talking about

accounting or the investment management piece?

Q. Well, both.

A. It's -- because there were so many companies, it's

more complicated than maybe to give those simple answers,

if you will.

Q. Okay. Let me go through it and --


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1276

A. There were some investment done on the brokerage side

decide that we would have handled directly.

Q. And what would those be?

A. Well, any mutual funds, stocks, bonds, any general --

you know, investment management for clients, the advisors

would have done.

Q. And is there anything wrong or fraudulent about doing

that?

A. No, there's not.

Q. Okay. And was that done on a regular basis?

A. Yes, it was.

Q. Is that done in any financial institution that does

what they did, SGC did?

A. Yes.

Q. Now, as far as the -- well, I guess -- let me ask the

question this way: We talked about yesterday about

Mr. Stanford being a marketing guy, the salesperson?

A. Correct.

Q. Head salesperson.

A. Uh-huh.

Q. There's no debate that he owned the company, is

there? I mean, he was the owner of the company?

A. No. He owned all the companies, right.

Q. Right. But he did rely on people to do their

correct; correct?


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A. Certainly.

Q. I mean, after all, this isn't just a four- or

five-person type of firm; correct?

A. Right.

Q. I mean, we're talking about -- how many people do you

think Stanford employed when it was shut down by the

receiver?

A. I think maybe as many as 5,000.

Q. Five thousand people.

A. Uh-huh.

Q. And there's no way for that one person to be able to

overview all 5,000, is there?

A. Correct.

Q. It's not possible, is it?

A. No.

Q. So you to have -- in a company that large, you have

to have some structure, do you not?

A. Yes.

Q. Some reporting structure?

A. Yes.

Q. That's not unusual, is it?

A. No.

Q. That's not fraudulent, is it?

A. No.

Q. That's simple, simple smart business, is it not?


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A. Yes.

Q. Okay. And, so, would it be fair to say that

Mr. Davis was in charge -- as the CFO, was in charge of

the numbers?

A. Of the accounting, yes.

Q. He was. I mean, is there any doubt in your mind

about that?

A. No.

Q. And Mr. Stanford was in charge of going out promoting

Stanford; yes?

A. Mr. Stanford was in charge of everything.

Q. He was. But Mr. Stanford didn't have direct

knowledge of the number. Mr. Davis did; correct?

A. Well, I assume Mr. Davis reported to Mr. Stanford, so

how could he not have direct knowledge of the numbers?

Q. Well, that's the problem. When we start assuming

things, we all get in trouble.

A. Well, I know that Mr. Davis reported to Mr. Stanford.

Q. I do that too, Mr. Green. I know that too.

A. Yeah.

Q. But what I'm asking you is not assume. Let's just go

with what we know.

A. I'm not assuming. I'm --

THE COURT: Hold it, one at a time and slow it

down.


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1279

THE WITNESS: Okay.

BY MR. FAZEL:

Q. Let's just you and I agree that we just go with what

we know; okay?

A. Okay.

Q. Thank you. We know for a fact Mr. Stanford was in

charge of the numbers -- excuse me -- Mr. Davis was in

charge of the numbers; correct?

A. Correct.

Q. All right. We know for a fact that Mr. Stanford was

a visionary of the company; correct?

A. Yes.

Q. He's the one that went out and promoted things;

correct?

A. Correct.

Q. And as a result, marketing material was important to

that; correct?

A. Correct.

Q. Because what was said, the look of the marketing

material, the color, the verbiage in there, these are

things that people look at; correct?

A. Correct.

Q. And so he was worried to make sure that the Stanford

icon, the Stanford, the name Stanford, was represented

correctly; correct?


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1280

A. Correct.

Q. So it's important to him -- it's important to him

that nobody violates his -- what he wants his company to

be.

After all, he -- it is his company;

correct?

A. Yes.

Q. Is there anything unusual about that?

A. No.


A. No.

Q. Okay. But he had to, just by the nature of the

company, just by what it -- it was set up, the way it was

set up, he had to rely on people to give him information.

Would you agree with that?

A. Yes.

Q. Let's talk about the CDs for a minute.

A. Okay.

Q. I want to make sure I understand the CD product, and

I want to make sure the jury understands the CD product.

A. Okay.

Q. So let's talk about that just briefly.

A. Okay.

Q. I'm not a financial advisor; fair?

A. I'm not an attorney.


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1281

Q. All right. There's two main types of investments.

There's equity and there's debt.

Is that a fair statement?

A. Yes, that's correct.

Q. Okay. And equity is the type of investment that you

take ownership of a company; correct?

A. Correct, sir.

Q. Some types of equity you have voting rights in;

correct?

A. Yes.

Q. So, for example, if I go out there and buy a share of

Enron -- that's not good -- Exxon --

A. Okay.

Q. -- I can go and get the share, and then when it comes

time to make voting decisions we just vote; right?

A. Correct.

Q. You can go to a meeting, and you decide if you want

to volt on a CEO or whatever they have up for a vote;

correct?

A. Correct.

Q. Okay. And then there's debt; correct?

A. Yes.

Q. Now, when you have debt, it's a promise to pay;

correct?

A. Yes.


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1282

Q. Okay. So the CD was a promise to pay; correct?

A. Yes.

Q. All right. It was so that you pay a certain

percentage at a time certain; correct?

A. Yes.

Q. Okay. Now, it didn't matter if SIBL was doing good

that year, was doing bad that year or was doing neutral

that year.

When that CD was due, it had to be paid;

correct?

A. Correct.

Q. It made no difference to the manner in which the CD

was set up that they made earnings or they lost money,

"they" being SIBL.

They had a debt obligation to pay;

correct?

A. Right.

Q. Okay. So when you invested in the CD, you were

investing in a debt instrument?

A. Correct.

Q. All right. Anything illegal about that?

A. No, sir.


A. No.

Q. Now, they were not provided to all people. In other


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1283

words, not every person in Houston or in the U.S. were

able to purchase these CDs; correct?

A. Correct.

Q. They had to be accredited.

Do you remember talking about just briefly

yesterday?

A. Yes.

Q. That is, they had to have certain financial means?

A. Yes.

Q. Okay. And we talked about this a little bit

yesterday as well.

The CD program was registered with a

certain entity.

Do you remember who that was?

A. Yes.

Q. Who was that?

A. Securities and -- SEC.

Q. Securities and Exchange Commission?

A. Yes. Thank you.

Q. That's all right.

A. Slipped my mind.

Q. That's okay. And they did that out of an abundance

of caution; correct?

A. Yes.

Q. Because they didn't feel like they, "they" being the


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1284

SEC, SIBL didn't feel like SEC had any jurisdiction over

it because it's not a security as in Securities and

Exchange Commission. It's not a security. However, out

an abundance of caution, they went ahead and made a

registration with them; correct?

A. Yes. They were concerned someone may deem it to be a

security, so they weren't entirely sure and they took the

safer option.


A. No.


A. No.

Q. When they made these offerings to the SEC, did they

not provide documentation to the SEC?

A. Yes, I believe they did.

Q. Did they not describe what the -- what the CD program

was?

A. My understanding is, yes, they did.

Q. And did SEC ever complain about that?

A. Not that I'm aware of.

Q. Let's put some time frame here because I feel like

we're kind of bunching in a lot of time together.

Sometimes we go in the future; sometimes we go way in the

past.

When we're talking about the offering to


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1285

the SEC and going to the SEC saying, Hey, we're going to

make this offering in the U.S., do you remember what

timeframe that was?

A. I think that was done -- I believe they did that

around '98, 1998.

Q. Okay. Right when the program started?

A. For the U.S. investors, yes.

Q. Right. And that's what we're talking about.

A. Right.

Q. I mean, after all, you were involved in the U.S.;

right?

A. Correct.

Q. So I know you weren't in the Bank of Venezuela, I

know you weren't in the Bank of Panama. So let's just

assume what we're talking about with you is just in the

U.S.; fair?

A. Okay. Sure. Yeah.

Q. Now, the accredited investor program has certain

requirements, and it's financial in nature. You have to

have a certain amount of money. You have to have certain

assets before you can purchase this CDs; correct?

A. Correct.

Q. And every purchase of this CD had to attest, if you

will; that is, to sign a document promising, saying, that

they are accredited investors; correct?


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1286

A. That is correct.

Q. All right. Anything illegal about that?

A. No.


A. No.

Q. All right. Now let's talk about the subscription

agreement and generally how these CDs were sold.

It's my understanding, and correct me if

I'm wrong, that every time a CD was sold, there were

certain documents that were pulled by operations and they

were given a specific number and put on that document;

correct?

A. That's correct.

Q. And these documents had to be given to the particular

investor for that investor to review and sign before he

could purchase a CD?

A. That is correct.

Q. Okay. Anything illegal about that?

A. No.


A. No.

Q. Okay. The gov- -- Mr. Stellmach yesterday put into

evidence Exhibit Number 131.

Do you remember talking about that? That

was the disclosure statement.


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1287

A. Yes, I do.

MR. FAZEL: Okay. Can we pull that up, please,

Government's Exhibit 131?

MR. WARREN: Your Honor, can you switch on the

monitor in the back for the jury?

THE COURT: Okay.

MR. FAZEL: All right. If we can look at

Page 3. That's one before that. I'm sorry. Apparently

stepping on my document and yours.

THE COURT: Anything on there yet?

MR. WARREN: Not yet.

THE COURT: All right. Give me a second.

MR. FAZEL: If we can go to the very bottom of

the paragraph and highlight it, please.

BY MR. FAZEL:

Q. Do you see that, sir, Mr. Green?

A. Yes.

Q. Now, this was provided to every single investor in

the CD program, correct, this document?

A. Yes.

Q. Now, I will tell you that I'm going to go through

this document with you and go through a lot of it, okay,

so just bear with me and I know it's a little tedious

and --

THE COURT: Again, what is this document?


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1288

MR. FAZEL: Oh, I'm sorry. It's Government's

Exhibit 131. It's the disclosure statement provided to all

CD investors.

THE COURT: I know -- there it is.

THE WITNESS: Can we move this? It's kind of

blocking the screen.

BY MR. FAZEL:

Q. Sure. I'm sorry.

A. Thank you.

Q. I thought I moved it for you.

A. I can't see that left side.

THE COURT: Pull it all the way in. Is that

better?

THE WITNESS: Yeah. That's perfect. Thank

you.

BY MR. FAZEL:

Q. Okay. It's that paragraph right there. And I'm

going to read it. I'm not going to make you read it.

A. Thank you.

Q. You're welcome.

"SIBL products are not subject to the

reporting requirements of any jurisdiction, nor are they

covered by the investor protection or securities insurance

laws of any jurisdiction, such as the U.S. Securities

Investor Protection Insurance Corporation."


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1289

Tell me what that corporation is, real

briefly.

A. The Securities Investor Protection Insurance

Corporation --

Q. Correct?

A. -- was set up by -- I believe it was set up by

Congress, and it is supported by all of the brokers in the

U.S. that pay money into it, you know, to insure against

any of those broker dealers going insolvent. That fund is

there to make clients whole if there's a loss due to

insolvency of a broker dealer.

Q. So it tells you right on the first page, Guess what,

we're not covered under that; correct?

A. That's correct.

Q. The reason they're not covered under that is because

it's not a security; correct?

A. Well, I believe because it's a non-U.S. entity is

what I would have assumed.

Q. Okay. Fair enough.

"The from CD deposits and CD certificates

are not issued by Federal Deposit Insurance Corporation

(FDIC) or any other agency of the United States Government

or any state jurisdiction or by any insurance program of

the Government of Antigua, Barbuda."

Do you see that?


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1290

A. Yes, I do.

Q. So right off the bat, they're saying, Guess what, no

insurance; correct?

A. Correct.

Q. This is like the first page you flip open the

document to; correct?

A. Correct.

MR. FAZEL: Now, if we can go to Page 7, PDF

Page 7, please, highlighting the top portion.

BY MR. FAZEL:

Q. "The CD deposits are ordinary deposit obligations of

SIBL. We believe that the CD deposits and the CD

certificates are not securities as such term is defined

under U.S. federal and state securities laws.

Nevertheless, because of the possibility that the CDs

deposits or CD certificate" --

THE COURT: Slow down a little bit, please.

MR. FAZEL: Sorry, Your Honor.

BY MR. FAZEL:

Q. -- "could be deemed to be securities by the U.S.

regulatory or judicial authorities, we have adopted the

same regulations and restrictions on solicitation."

Do you see that?

A. Yes.

Q. Okay. So what they're telling at us there is, We


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1291

don't think it's a security, but out of an abundance of

caution, we went ahead and registered it; correct?

A. Correct.

Q. All right. Next paragraph.

"By signing the subscription agreement,

you are acknowledging receipt, as well as careful review

and understanding, of this document statement, the

subscription agreement, the investor questionnaire, any

additional account documents that we" -- "may be required,

and their respective terms and conditions."

Do you see that?

A. Yes.

Q. So what we're telling the client there, the person

purchasing this, is you agree that you have read this

thing in its entirety and understand it; correct?

A. Correct.

Q. I mean, after all, you did sell these CDs; correct?

A. Correct.

Q. All right. And from time to time, did you not view

this document to review your -- with your clients?

A. Yes.

Q. And did you review it with your clients?

A. Yes.

Q. Did you make sure they signed it?

A. Yes.


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1292

Q. Did you make sure they understood it?

A. Yes.

Q. Okay. Was it a job of every financial analyst --

excuse me -- financial -- the FA?

A. Financial advisor.

Q. Advisor. Thank you.

Was it their job to make sure their

clients understood this?

A. Yes.

Q. Okay.

MR. FAZEL: Going down to the one -- to the

last paragraph, where it says "investors." No. No. That

one right there. That paragraph right there. Thank you.

Very last line.

BY MR. FAZEL:

Q. "The investor should be aware that they will be

required to bear the financial risks of this investment

for" -- and.

MR. FAZEL: I can't even read that.

THE WITNESS: "For an indefinite" --

BY MR. FAZEL:

Q. -- "for an indefinite period of time."

I'm sorry. Thank you. My copy is real

bad.

What does that mean?


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1293

A. That means that the investor was aware that they bore

the financial risks, that if the CD did not perform well,

they could take a financial loss.

Q. Okay. Let's talk about that right there.

You just said if the CD did not perform

well.


A. Well, if the -- if the bank did not perform well.

Q. But it doesn't matter, does it? It's a debt

obligation. If the bank is there, has the money, we'll

pay the debt obligation; correct?

A. Correct.

Q. If the bank is not there, if it goes bankrupt, if it

goes insolvent, they lose their money; correct?

A. Correct.

Q. Now, this is a debt obligation. If you go buy debt

in GM, for example --

A. Yes.

Q. -- and GM goes bankrupt, what happens to your money?

A. You're going to lose some portion of it, perhaps all

of it.

Q. Perhaps all of it.

It's not unusual, is it.

A. No.

Q. Okay. It's different than equity, because in equity


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1294

you have ownership right in the company; correct?

A. Correct.

Q. But not in this program, you had no ownership right

in this program; correct?

A. Correct.

Q. Right. So it doesn't matter whether the CD performed

well or not, it's the bank is there, it pays the money.

If it's not there, guess what, you don't get your money;

correct?

A. Correct.

Q. All right.

MR. FAZEL: If we go on to Page 2 of the actual

document. It talks about general overview. If you can

highlight that portion, please.

BY MR. FAZEL:

Q. Okay. And I don't know how to tell this to you, so I

apologize. But in the middle of it, it says the

following: "You may purchase three types of the time

deposit offered by SIBL CD depositors."

Do you see that?

A. Yes.

Q. Okay. They used the term "time deposits." What does

that mean to you?

A. That means they deposit, that there's a contractual

agreement on you, give someone the money and they're going


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1295

to keep it for a specified period of time and then return

it to you, with interest, you know.

Q. With a promised interest?

A. Interest or whatever was agreed to pay.

Q. All right. Let's focus in on that. They're going to

take your money, they're going to promise they're going to

pay you an interest?

A. Correct.

Q. They're going to do whatever they want with the

money, and then at the end of that period, they're going

to pay you back; correct?

A. Well, I would take a little exception with they're

going to do whatever they want with your money.

Q. Well, it's a debt obligation, is it not, Mr. Green?

A. It is a debt obligation.

Q. As a debt obligation, once you put the money into GM,

does GM have to check with you before they do whatever

they want with the money?

A. Depends on the covenants of that debt obligation.

Q. The covenants of the debt obligation?

A. Yes.

Q. We'll talk about the covenants of this debt

obligation in a minute.

Because the covenants of this debt

obligation is in this document right here, is it not, sir?


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1296

A. It's -- it's the -- this document and all the

documents that were put out by the -- by the international

bank.

Q. Okay. Well, I'm a little confused. Doesn't this

document in a portion say that you're only to look at this

document and nothing else?

A. I don't recall it saying you're only to look at this

document.

Q. Okay. Well, let's get there.

MR. FAZEL: Let's move forward to the next

section, if you will.

BY MR. FAZEL:

Q. Its says, "Global investment portfolio."

MR. FAZEL: On Page 3. I'm sorry. That's

Page 2. Thank you.

BY MR. FAZEL:

Q. Do you see that section, sir?

A. Yes, I do.

Q. Now, you went over this with the government. Is

there anything about that section you feel is fraudulent

or incorrect?

A. I don't recall going over this with the government,

per se, in that detail.

Q. Take your time reading it and tell us if there's

anything fraudulent or inaccurate about this section.


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1297

Anything about that section that you thought was

inaccurate, fraudulent or anything like that?

A. I've read the first paragraph so far and, no, there's

nothing I thought was inaccurate or fraudulent. Would you

like me to read the next one?

Q. You're more than welcome to, Mr. Green. I'm assuming

you've read these documents before?

A. I have.

Q. Okay. All right.

MR. FAZEL: If I can get to Page 5 of that

document, please, the one we're looking at, which is

Exhibit Number 131.

BY MR. FAZEL:

Q. And it says, "Investment Risk and Strategy." Top

bold. "You may lose your entire investment under the

circumstances where we may be financially unable to repay

those amounts. Payments of principal and interest are

subject to risk."

What does that tell you?

A. Exactly what it says.

Q. What does that mean to you?

A. All of your money is at risk, and if they're not able

to pay, you could lose all your money.

Q. Right. If the bank is not able to pay, you're going

to lose all your money?


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1298

A. Correct.

Q. All right.

MR. FAZEL: Now, let me move forward from

this -- thank you. That's all I have for this document.

BY MR. FAZEL:

Q. There's also another document that you had to sign as

the purchaser of the CD, and it was called a subscription

agreement; correct?

A. Correct.

Q. Have you reviewed that document before?

A. Yes. It's been awhile.

Q. It's been awhile. Okay.

Was there anything in that document that

you believed was illegal or fraudulent?

A. No.

Q. Did you review those with your particular clients as

well?

A. Yes.

Q. Okay.

MR. FAZEL: If I can bring back Exhibit

Number 131 again, please. Page 4. Where it says, "Due

Diligence by Depositor."

BY MR. FAZEL:

Q. Okay. Let's talk about this. "Due Diligence by

Depositor." What does that mean to you, just the title


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1299

itself?

A. Due diligence by depositor means that the depositor

is going to investigate whatever they're going to deposit

in. They're going to investigate the risk and return

characteristics of something before they would make an

investment in it.

Q. Okay. Let's read the entire section. "We have

prepared this disclosure statement to provide you selected

information about the U.S. accredited CD program" -- I'm

sorry -- "investor CD because this disclosure statement

cannot be all exclusive."

Do you see that?

A. Yes.

Q. "We recommend you conduct further due diligence --

let me read it from mine because I can't read that far.

-- "including examining of supplemental

data and information available through us before making

definitive commitments."

What does that tell you?

A. That this document cannot include all the information

about the potential investment and, so, they recommend

that you as an investor investigate it further and exam

supplemental data and information available.

Q. Before you make the purchase; right?

A. Correct, before.


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1300

Q. They're saying, hey, look at this and let us know if

you want anything before you make the purchase?

A. Correct.

Q. All right. "We will make available to you for

your -- let me read mine. I can't see that far.

"We will make available to you for

inspection during normal business hours our relevant

business, financial and other information and data which

you may reasonably request to make informed judgments with

respect to investing to the U.S. accredited investor CDs,

including but not limited to anything that goes on

there" -- it talks about it; right?

So it's telling you that you can contact

us and go over whatever you want from us; correct?

A. Correct.

Q. Okay. They could contact you and ask you any

questions they wanted from you; correct?

A. Correct.

Q. Ask for anything they wanted; correct?

A. Correct.

Q. And you would provide it to them; correct?

A. If it was something that they were willing to provide

to me, I would provide to them.

Q. Right. Is there anything illegal about that?

A. No.


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1301


A. No.

Q. They're asking them to come ask questions. "If you

have questions, let us know and we'll answer them for

you"; correct?

A. Right.

Q. All right. Then it goes on to say, "We will also

make available to you an opportunity to ask questions and

receive answers and to obtain any additional information

as you may request concerning U.S. accredited investor CDs

and our financial condition and affairs."

Do you see that?

A. Yes, I do.


A. Only if people lie about their financial condition

and affairs.


A. Only if people lie about their financial condition

and affairs.

Q. Did you lie about the financial condition of affairs,

Mr. Green?

A. I did not, but I was -- feel like I was lied to.

Q. I understand you feel that way, but that's just your

opinion; right?

A. It seems to be pretty clear. I mean --


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1302

Q. Why is that, Mr. Green? Do you have some information

I don't?

A. I have a lot of clients, friends, relatives that

haven't gotten a penny back, and it doesn't look like they

will because there is no money.

Q. Well, I understand that you feel that way, Mr. Green,

but the receiver took the bank over; correct?

A. Yes, they did.

Q. Prior to the receiver taking the bank over in 2008

when the economy was so terrible and everybody was in a

financial crunch at that time, was there anybody that

wasn't paid their CDs ahead of time?

A. The last client, yes.

Q. You keep talking --

A. Yeah, there was a -- there was a withdrawal that

was -- a request that was put in, and he never --

Q. You --

A. -- received his money.

THE COURT: Hold him. Let him finish.

MR. FAZEL: Sure. I'm sorry, Your Honor.

THE WITNESS: There was a withdrawal that --

one person I know of specifically that had a withdrawal

request in prior to Mr. Stanford stopping the withdrawals,

and he has never received his money.

BY MR. FAZEL:


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1303

Q. That one person? How many clients --

A. It was a large -- it was a 20-some-odd million-dollar

withdrawal, if I recall correctly.

Q. And do you remember testifying about the fact that --

THE COURT: Slow down.

MR. FAZEL: Yes, Your Honor.

THE COURT: You've got plenty of time.

MR. FAZEL: I understand.

BY MR. FAZEL:

Q. Do you remember testifying about the fact that there

were many large depositors in SIBL?

A. Yes.

Q. And prior to that stop that we're talking about, that

one client that we're talking about right now that you

keep mentioning, prior to that one client, was there

anybody else that requested their money back that did not

receive it that you're aware of?

A. No. There may have been a couple others, but not

that I'm aware of specifically.

Q. Everybody who asked for their money, even people who

asked for their money ahead of time, got their money?

A. Yes.

Q. It's when the receiver took the company over that

that stopped; yes?

A. No, it's when Mr. Stanford put the stop on people


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1304

taking early withdrawals out that it stopped.

Q. But people were taking early withdrawals. He wasn't

stopping people who were due to take their money out, was

he?

A. No.

Q. Was he stopping the interest rate program?

A. No.

Q. So it was people who wanted their money out early who

signed a contractual agreement saying they couldn't do

that that he stopped?

A. That the bank at its discretion could discontinue

those early withdrawals, right.

Q. And it used its discretion; correct?

A. Correct.

Q. Now, in 2008, was there not an economic calamity

going on?

A. Yes, there was.

Q. Was there not a run on the bank?

A. I don't know if I would define it as a run, but there

was more withdrawals than there were deposits.

Q. Were you in a position to know how much there were

withdrawals?

A. No, not on a daily basis.

Q. No. So it's only just a sliver of your knowledge

that you're now talking about, that we're talking about --


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1305

and that's fair. I'm not saying it's bad or good. I'm

just saying that you just had one section of Stanford;

right?

A. Correct.

Q. You just talked about the other banks that were not

in the U.S.; right? We --

A. Right.

Q. -- talked about that.

We talked about there's other financial

advisors; right?

A. Correct.

Q. There are offices all over the U.S.; right?

A. Yes.

Q. And they had people coming in and asking for money,

too; right?

A. Yes.

Q. And they were asking for money -- well, let me phrase

it this way: They were getting their monies out of the CD

program because they had -- "they" being the other

investors -- probably had cash calls and other

investments; right?

A. There's only one that I'm aware of that was their

issue.

Q. Right. And, so, they had to cover that cash call;

correct?


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1306

A. Correct.

Q. All right. So my point is that even though you don't

know there's a run on the bank, but there was most likely

a high probability that there was a lot of people coming

to the bank asking for their money; right?

A. Yes.

Q. And that is defined as a run on the bank; right?

A. Honestly, I don't know where you cross the line

between withdrawals and a bad -- to an absolute panic,

hysteria. I mean, to me a run is a panic, hysteria,

people lined up outside the door, the old -- you know,

that's how I see a run.

Q. Right.

A. I was afraid it would turn into a run on the bank.

Q. We are going to get to that in a little bit, because

you're right, there are some communications and there are

some e-mails from you having that fear; right?

THE COURT: Slow down.

THE WITNESS: Yes.

MR. FAZEL: I'm sorry, Judge.

BY MR. FAZEL:

Q. So, I guess my point to you is that everybody got

their money prior to the receiver taking it over; right?

A. (Answered affirmatively.)

Q. I know you were a little upset because -- and you had


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1307

family members invested in the CD program; right?

A. Correct.

Q. And they didn't get their money?

A. No.

Q. But they didn't get their money after the receiver

took over; right?

A. Correct.

MR. FAZEL: Your Honor, there's a --

THE COURT: Yes.

JUROR: I need to go to the restroom.

THE COURT: Absolutely.

JUROR: I'm sorry.

THE COURT: No, no. Hold it. We always take

ten minutes. No big deal. It's now about -- what is it --

a couple of minutes before 10:00. We'll get back in at

11:10. No problem. Hold it a second before we do that.

(Recessed at 10:58 a.m.)

(The following was held before the jury)

THE COURT: Ladies and gentlemen, it's now

right about 11:15. We're going to go to 12:45 and take a

break from 12:45 to 2:00 o'clock. So I think we'll do

it -- again, anybody needs to take a break for any reason,

let me know.

Go right ahead, Counsel.

MR. FAZEL: Thank you.


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1308

BY MR. FAZEL:

Q. Okay. Mr. Green, when we were talking last, I think

we were talking about investments and all that, and then

we were going to focus back in on the document we were

looking at.

A. Okay.

MR. FAZEL: So if I can get Your Honor to bring

the screen down. And if we can go to Page 4.

BY MR. FAZEL:

Q. Now, if you continue to read that paragraph, it will

tell you that neither SIBL -- which is Stanford

International Bank, Limited; correct?

A. Correct.

Q. -- "not any of our respective officers, directors,

control persons, employees, affiliates, consultants or

agents make any representations or warranties, express or

implied, as to the completeness of this disclosure

statement, and no legal liability is assumed or is to be

implied against any of them based on any such

representation or warranty."

Do you see that?

A. Yes.

Q. Okay. Right after that, "The only information that

will have any legal effect will be" -- I'm going to let

you read the rest of that.


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1309

A. "...will be that expressly represented in this

disclosure statement and the accompanying subscription

agreement and investor questionnaire, the offering

documents."

Q. Any questions about that?

A. No.

Q. Anything about that that's false?

A. No.

Q. Anything about that that's fraudulent?

A. No.

Q. Anything about that's confusing?

A. No.

Q. And if you go to the next page, on Page 5, it talks

about -- we already talked -- we already hit that section

right there.

Do you remember talking about that just a

minute ago?

A. Yes.

Q. Okay. Right below that, it talks about referral

fees.

MR. FAZEL: All the way down, next section.

There you go.

BY MR. FAZEL:

Q. Is there anything about that section that's

fraudulent, illegal?


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1310

A. No.

Q. And that basically tells you what?

A. That there's a referral fee paid by the bank to

Stanford Group Company.

Q. So it's informing the potential purchaser of the CD

what's going on; that is, Stanford International Bank will

pay a referral fee to SGC, Stanford Group Companies, for

this CD that was just purchased; correct?

A. Correct.


A. No.


A. No.

Q. All right. Now, there were -- there are several

types of CDs; correct, Mr. Green?

A. Yes.

Q. There's three types?

A. Yes.

Q. All right. Was there anything illegal about the

types of CDs that were available for purchasing?

A. No, there's not.

Q. Was there anything fraudulent about the three types

of CDs that were available for purchasing?

A. No.

Q. As a matter of fact, the types of CDs also had some


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1311

flexibility as to when you should cash them in; right?

A. Correct.

Q. Some of them you could cash in quicker than other

ones?

A. Right.

Q. Was there anything illegal about that?

A. No.


A. No.

Q. How about the fact that the ones that you could cash

in -- well, correct me if I'm wrong.

The ones that you couldn't cash in as

quickly had a higher interest rate; correct?

A. Correct.

Q. Is there anything illegal about that?

A. No.


A. No.

MR. FAZEL: All right. Going on to Page 10,

please.

BY MR. FAZEL:

Q. Now, I believe you went over this with the government

when they were speaking with you earlier yesterday.


A. Yes, I do.


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1312

Q. I want you to focus in on the third last -- that one

right there.

MR. FAZEL: If you can highlight that for me.

And just the paragraph, not the numbers. We'll get to the

numbers in a minute.

BY MR. FAZEL:

Q. "The funds deposited with us are primarily invested

in foreign and U.S. investments."

Do you see that "primarily," that term?

A. Yes, I do.

Q. What does "primarily" mean to you?

A. "Primarily" means predominantly.

Q. Mainly?

A. Vast majority.

Q. Vast majority means "primarily"?

A. Yes.

Q. Mr. Green, if I was to look up "primarily" in a

dictionary, I would see "vast majority," you think?

A. I don't know.

Q. Okay.

A. I think the context in which it's used here it means

substantially all, primarily, almost exclusively.

Q. Is that the way you read it?

A. That is how I read it.

Q. Mr. Green, is that what you told your investors?


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1314

Q. And that's what you did?

A. Correct.

Q. Did your other client -- did your clients go seek

that information?

A. They perhaps -- yes, they did, you know, they did

seek that information directly and also indirectly through

me.

Q. Okay. So I guess, since I don't have the clients

will here, so I can't go into hearsay statements.

But the document clearly says that the

clients can go seek that go information; right? Right?

A. Yes.

Q. And there is training manuals that we can talk about

that you talked about that says, tells you, that you are

to stick with what is said in these documents and nothing

else; correct?

A. I don't know about the training manual that says

that, to be honest.

Q. Well, I mean, the whole point of this document,

Mr. Green, it is it not to make sure that everybody gets

the same type of information at the same level; that is,

the document is supposed to be the end-all for everybody

who purchases those CDs; right? Correct?

A. Except for the additional information they request.

Q. If they request additional information; correct? And


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1315

they're the ones that are supposed to seek the additional

information. Isn't that what that document says? You can

come talk to us?

A. Yes, I believe that's what it said.

Q. All right. Now, let me move on to something else, if

I can.

Mr. Green, yesterday --

MR. FAZEL: I'm sorry. I'm done with that

document. Thank you very much.

BY

Allen Stanford Criminal Trial Transcript Volume 5 Jan. 27, 2012

Documents

Transcript of Allen Stanford Criminal Trial Transcript Volume 5 Jan. 27, 2012