Lieutenant Offers Ponzi Details, as Stanford Raced to Hospital

Accused fraudster R. Allen Stanford remained in the hospital today after being rushed there with his pulse racing as high as 300 instead of to Federal District Court in Houston where he was scheduled to appear Thursday.

Attorney Dick DeGuerin told Bloomberg in an email that, “We’re told the doctor wants to keep (Stanford) in the hospital for observation for three to five days.”

But while the man accused of running a $7 billion fraud scheme wasn’t there, his chief lieutenant, in a plea agreement with authorities, outlined the blood oath and bribes that defined Stanford’s relationship with an Antiguan bank regulator.

While Stanford’s irregular heartbeat was being attended to, James M. Davis, chief financial officer at Stanford’s company, pleaded guilty to fraud and conspiracy and outlined in his plea agreement the pact between Stanford and Leroy King, Antigua’s chief banking regulator, the New York Times reports.

Davis alleged in his agreement that Stanford and King cut their wrists and mingled their blood in a “brotherhood ceremony.” After that, King called Stanford “big brother,” took Super Bowl tickets and regular bribe payments from a Swiss Bank account Davis said he was told to handle by Stanford.

It’s not clear when Stanford, the flamboyant business man with a passion for polo, will be out of the hospital and ready to go back to court.

He and his associates are accused of defrauding 30,000 investors of $7 billion, filing false reports to regulators and investors, and diverting $1.6 billion in personal loans to Stanford.

Davis oversaw vast amounts of money at Stanford International Bank and said he acted on Stanford’s orders to report false revenue and false investment portfolio balances. The false reports were filed as far back as 1988. He faces up to 30 years in prison.

Stanford has denied he ran a Ponzi scheme and said if anything illegal happened, it must have been Davis’s fault.

It’s a sad end to a friendship that began when the two men were roommates at Baylor University in Waco, Texas.