Stanford and Nadir head to court

Stanford will battle charges that he operated a $7 billion Ponzi scheme from Stanford International Bank, his offshore bank on the Caribbean island of Antigua.

While Turkish-Cypriot businessman Asil Nadir, who returned to Britain two years ago after 17 years abroad, will defent his failed Polly Peck business empire from charges dating back to the 1980s.

Stanford, a native Texan who was knighted by the government of Antigua in 2006, is accused of misleading investors about certificates of deposit (CDs) issued by his offshore bank, in one of the biggest white collar fraud cases since Bernard Madoff.

The CDs were touted as safe, with funds "generally invested in investment grade bonds, securities and foreign currency deposit," according to literature distributed by Stanford's brokerage firm.

Instead, prosecutors allege, Stanford invested CD proceeds in illiquid pet-project investments that included Caribbean real estate, a Cowboys and Indians magazine and a pawn shop operator. He also loaned more than $2 billion to himself.

The alleged Ponzi scheme started to unravel in late 2008 as the financial crisis deepened and more and more investors asked for redemptions, a situation that left Stanford scrambling for cash.

Prosecutors will likely rely heavily on the testimony of the firm's former Chief Financial Officer James Davis, who pleaded guilty in August 2009 and has been cooperating with the government. The two men were college roommates at Baylor University in Waco, Texas.

In past interviews, Stanford has blamed Davis, a theme that is likely to be repeated by the defense at trial.

"I didn't oversee anything in the investment portfolio, that was the CFO's responsibility,"

Stanford, 61, has pleaded not guilty to 14 criminal counts of fraud, obstruction of a federal investigation and conspiracy to launder money.

Among the alleged crimes prosecutors expect to prove to the Houston jury is that Stanford was involved in falsifying financial statements and made false statements about Stanford International Bank's financial condition.

The SEC seized all of Stanford's assets in February 2009 after filing a civil lawsuit. His lawyer at the time, Dick DeGuerin, said the government's action did not even leave enough money for his client to buy underwear.

Once No. 205 on Forbes' list of richest Americans, Stanford's defense is paid for with US tax dollars and his 81-year-old mother is struggling to help.

In London Asil Nadir, the 70-year-old tycoon, has previously pleaded not guilty to 13 charges, including theft of £33.1 million and $2.5 million from the business between 1987 and 1990.

Nadir, who ran Polly Peck until it folded in 1990 with debts of £1.3 billion, was a big donor to the Conservative Party.