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Case 4:09-cr-00342 Document 244 Filed in TXSD on 06/09/10 Page 2 of 14
INTRODUCTION
R. CRIM. P. 14, to sever her trial from Robert Allen Stanford’s (“Stanford”) trial.
Stanford and his counsel have prejudicially impacted Holt’s right to a fair trial
based on their egregious and circus-like conduct in: the criminal case before this
Court, the insurance coverage action in the Southern District of Texas before The
Honorable Nancy F. Atlas, and the United States Securities and Exchange
together” United States v. Erwin, 793 F.2d 656, 665 (5th Cir. 1986) a court “may
granted “if there is a serious risk that a joint trial would compromise a specific trial
right of one of the defendants or prevent the jury from making a reliable
317 (5th Cir. 2009) (citing to United States v. Bermea, 30 F.3d 1539, 1572 (5th
Cir. 1994)).
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In this case, there is a serious risk that Holt’s right to a fair trial will be
jeopardized if she is tried together with Stanford. This risk stems from the
ridiculous conduct of Stanford and his lead counsel, which is sufficient to justify
tried together. Zafiro v. United States, 506 U.S. 534, 537 (1993).1
The behavior of Stanford and his latest collection of lawyers (The Bennett-
Nguyen Joint Venture), who have flaunted court orders, set up potentially unethical
entities to practice law in Texas, have been accused of committing insurance fraud
and bankruptcy fraud, and have faked health issues in court, has made it impossible
for Holt to receive a fair trial. This ridiculous behavior has not gone unnoticed.
The media nationwide has become enthralled with the circus show Stanford and
his counsel have cast against this Court, Judge Atlas’ Court, and Judge Godbey’s
Court regarding the never-ending cycle of lawyers in this case.2 For example, The
1
See also United States v. Miranda, 248 F.3d 434, 439 (5th Cir. 2001).
2
This is a sampling of the media converge on this issue. See Andrew Ross Sorkin, Once
Again, Mr. Stanford Wants New Lawyers, The New York Times Dealbook, March 10, 2010,
available at http://dealbook.blogs.nytimes.com/ 2010/03/30/ once-again-stanford-seeks-new-
lawyers; David Scheer and Alison Fitzgerald, Stanford Attorneys’ Exit ‘Screams Fraud,’ Spurred
SEC (Update2), available at http://www.bloomberg.com/apps/ news?pid =20601103&sid
=arwyfUgv9leY; Mary Flood, Yet another lawyer wants to enter Stanford case, Houston
Chronicle, June 3, 2010, available at http://www.chron.com/disp/story.mpl/ business/
stanford/7035307.html; Amir Efrati, How Many Lawyers Does it Take to Defend Allen
Stanford?, The Wall Street Journal, June 7, 2010, available at http://blogs.wsj.com/
law/2010/06/07/how-many-lawyers-does-it-take-to-defend-allen-stanford; Martha Neil, How
Many Lawyers Does Constitution Allow? Onetime Billionaire Allen Stanford May find Out, ABA
Journal, April 6, 2010, available at http://www.abajournal.com/ news/article/
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Case 4:09-cr-00342 Document 244 Filed in TXSD on 06/09/10 Page 4 of 14
Wall Street Journal took such a keen interest in this issue that it published a feature
story on it this past Saturday, and then republished a similar story the following
Monday on its legal blog complete with a “nifty” diagram”3 highlighting the
“revolving door” of different lawyers involved.4 And they are not the only ones.
Beyond the headlines, the events that took place in the trend lines on May
14, 2010, mark a starting point for tracing the escalating threat to Holt’s right to a
fair trial. Specifically on that date, Mike Essmyer (“Essmyer”), Stanford’s then
lead counsel, moved this Court to withdraw his representation. Essmyer explained
thrown in jail the previous weekend for contempt of court for refusing to turn over
documents in a civil lawsuit against him over sharing legal fees the previous.5
how_many_lawyers_does_ constitution _allow_ onetime_ billionaire_ may_ find_out;
Associated Press, R. Allen Stanford again wants new attorneys, March 30, 2010, available at
http://www.khou.com/ news/local/ Texas-financier-Stanford-again-wants-new-attorneys-
89531382.html; Brenda Sapino Jeffreys, R. Allen Stanford Wants New Criminal Defense Counsel
–Again, Law.com, April 6, 2010, available at http://www.law.com/ jsp/ article.jsp?id
=1202447536864.
3
See Exhibit A, attached. The Wall Street Legal Blog Diagram.
4
Amir Efrati, Stanford Defense Turns Into Legal Circus, The Wall Street Journal Online
Top Stories in Business, June 5, 2010; same discussion published in a more condensed form
online on Monday in the law blog by the same author, Amir Efrati, How Many Lawyers Does It
Take To Defend Allen Stanford, The Wall Street Journal, June 7, 2010,
http://blogs.wsj.com/law/2010/06/07/how-many-lawyers-does-it-take-to-defend-allen-stanford.
5
On May 8, 2010, Bennett was thrown in jail for contempt of court for refusing to turn
over documents in civil lawsuit over sharing legal fees by County Civil Court at Law Judge
Jacqueline Smith. Judge Smith found that Bennett had repeatedly refused to provide documents
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These antics naturally prompted the community to react as well. For instance, one
by describing this case as “the biggest circus I have ever seen”6—which, ironically,
was echoed days later by The Wall Street Journal. Like the media and like the
public’s outcry against these circus acts, Holt’s counsel could not agree more.
Bennett’s actions are not in the best interest of their client, and already have
that Bennett’s actions are detrimental to her case—especially now with Bennett’s
role as lead counsel for Stanford as of June 9, 2010. And the situation is getting
to the court he was previously ordered to produce. See Mary Flood, Stanford’s Lawyer Jailed
for a Night, Houston Chronicle, May 10, 2010, available at http://www.chron.com/ disp/story.
mpl/business/stanford/6999166.html; see also Lawyer for Alleged Ponzi Scheme Jailed Over
Discovery Issues, American Bar Association Legal, Legal Ethics Section, May 11, 2010,
available at http://www.abajournal.com/news/article/ lawyer_for_alleged_ ponzi_schemer_
jailed_over_discovery_issues.
6
See Exhibit B, attached. The Houston Chronicle Online Response.
7
See Chapter 7 Bankruptcy in 2009, In re Robert S. Bennett, U.S. Bankruptcy Court,
Southern District of Texas, Case No. 09-36637; see also Chapter 13 Bankruptcy in 2008-09, In
re Robert S. Bennett, U.S. Bankruptcy Court, Southern District of Texas, Case No. 08-35285-
H1-11.
8
Transcript of Record at 98-99, Laura Pendergest-Holt v. Certain Underwriters at Lloyd’s
of London and Arch Specialty Insurance Co., Case No. H-09-CV-3712 , evidentiary hearing on
June 3, 2010 before Judge Atlas, hereinafter (“Holt Transcript”); see also PACER Document
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from alleged illegal fee structures Bennett proposed with other lawyers he planned
to work with in this case.9 There is also another dimension to this issue. Bennett
and others have formed a business venture exclusively for representing Stanford.
It is unclear whether this “joint venture” is legal and who is exactly doing what in
this venture, something that Judge Atlas took great efforts to clarify in the June 3
hearing. What is clear is the ridiculous stream of people flowing in and out of the
raised red flags of suspicion by the Bureau of Prisons which was subsequently
expounded upon by Judge Atlas. She reinforced that the perception given off by
the actions of those involved created a noticeable issue regarding the lack of
“credibility” and “continuity,” something already established in this case thus far.11
submitted to the insurance company. By almost any reasonable standard, this fee
Number 128, Letter from Counsel for Certain Underwriters, Akin Gump Strauss Hauer & Feld
L.L.P. to Judge Atlas on June 2, 2010 and supporting documentation.
9
Id.; see also id. at 92-94 (highlighting the Underwriter’s counsel Lane discussing the
confusion surrounding the “Bennett Joint Venture” and orders from a County Court to pay into a
registry of the court.
10
Id. at 18 (citing to the Bureau of Prisons, who noted 20 different legal assistants a day).
11
Id. at 23.
12
Rule 1.04, Texas Disciplinary Rules of Professional Conduct.
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“pro se” correspondence to the Court. At the June 3, 2010 hearing, Judge Atlas
took issue with this confusion and confronted Bennett. He confessed, stating that
making statements and filing documents that are not based on accurate facts.14
This occurred most recently at the June 3, 2010 hearing where Judge Atlas
criticized Bennett for doing this on three separate occasions.15 Part of the problem
defense. Not surprisingly, in reaction to this during the hearing, the Government
stated they want nothing to do with the “soap opera” between Bennett and
Essmyer.16 And neither does Holt nor her counsel moving forward in this
proceeding.
it is likely that these issues will be grounds for additional 404(b) evidence that the
Government could introduce at trial against Stanford. Indeed, this will further
prejudice Holt’s right to a fair trial. Therefore, it is imperative that this Court sever
13
Id. at 24-25.
14
Holt Transcript at 114-117.
15
Id.
16
Id. at 115.
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Holt’s trial from Stanford’s trial to avoid a spillover effect that would violate her
fundamental rights.
The Sixth Amendment and the Due Process Clause of the Fourteenth
“other circumstances not adduced as proof at trial.” Holbrook v. Flynn, 475 U.S.
560, 567 (quoting Taylor v. Kentucky, 436 U.S. 478, 485 (1978)).
prejudice in the court arrangement, they need not “prove with particularity wherein
[s]he was prejudiced,” Estes v. Texas, 381 U.S. 532, 544 (1965). Rather, under
impermissible factors coming into play.” Holbrook, 475 U.S. at 570 (quoting
Estelle v. Williams, 425 U.S. 501, 505 (1976)). In addition, the district court
should give careful attention to the toxic nature of the potential prejudice created
by the co-defendant. United States v. Mannie, 509 F.3d 851, 856-57 (7th Cir.
2007).
Here, Stanford and his counsel’s antics fall squarely in line with the
unacceptable and prejudicial risk factors set forth in the Supreme Court’s Holbrook
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Circuit case provides this Court with the most applicable guidance for deciding this
severance motion. Mannie, 509 F.3d at 851. Although this Seventh Circuit case is
persuasive and not binding, it is important to direct this Court’s attention to the
fundamental principles and teachings from the similar issues and fact patterns
More specifically, in Mannie, the Seventh Circuit held that a defendant was
denied a fair trial because the trial court’s limiting instructions and extensive voir
repeated and violent outbursts. Id. The court explained that in most cases a trial
court’s primary weapon to combat bias and prejudice was jury instructions and
But there are always exceptions where the normal safeguards prove
ineffective. Id. This is what the Mannie case is about. From a macro-perspective,
Mannie teaches that when serious questions of prejudice arise at the outset of trial,
immediate action should be taken by the trial court. This action should not include
have occurred. Id. at 853-857. Instead, when the mere hint of prejudice surfaces, a
trial court should give careful attention to the potential for future prejudice and act
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In Mannie, the trial court’s efforts were insufficient to shield the peaceful
co-defendant from the prejudice of the toxic defendant. This was even after: (1)
the toxic defendant’s lawyer warned the court about the escalation of violence and
prejudice that was certain to come; (2) the lawyer tried to resign from representing
the toxic defendant—parallel to this case; (3) the lawyer’s identical description to
the case as a “circus”—which is also the identical adjective used to describe this
events that have transpired in this case already—this Court now has an opportunity
to do the exact opposite of the lower court in Mannie and protect Holt’s
C. The Unique and Severe Double Prejudice from Stanford and Counsel
Provides Twice the Justification for Severing Holt’s Trial from
Stanford’s Trial
As set forth in Mannie, the potential for prejudice in this case renders the
primary weapons against prejudice and bias inapplicable. This case, however, is
more unique and departs from jurisprudence in this area. The key difference in this
case is the existence of double prejudice. Instead of the normal one dimensional
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in most cases, here we have a double prejudice created: (1) by the defendant, and
(2) by his lead attorney. Therefore, severance is an even more just resolution to
I. Defendant Prejudice
Turning first to the prejudice of the defendant, like the toxic defendant in
Mannie, Stanford’s prejudicial behavior has been obvious from the beginning. Id.
at 853. First, in one court proceeding, Stanford bit his tongue and spat blood into a
cup to concoct a medical condition to fool everyone into believing he had internal
combative and uncooperative in his disregard for the legal system by burning
through eleven different law firms in a circus like manner. Third, in a recent
the legal process on his Sixth Amendment rights. This conduct required the Court
to halt proceedings and order him to sit down and remain quiet. These antics are
only the beginning of Stanford’s charades, and are certain to get worse as trial
approaches.
now doubles the prejudice in this case of unacceptable factors that will destroy
Holt’s right to a fair trial. For example, the ridiculous demand made on the
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insurance company by Bennett for an $80 million budget to defend Stanford. This
is significant because the same carrier provides defense costs for all defendants in
this case. This stunt has two serious implications. First, this unconscionably high
figure has the potential to interfere with any chance Holt may have to negotiate a
settlement for future funding to support her defense through trial. Second, these
actions have an offsetting effect that may place Holt’s Sixth Amendment right to
The Court cannot standby and let Stanford and his counsel’s course of
instructions and no pre-trial interventions that the Court may try can ensure that
Holt will obtain a fair trial. Accordingly, this Court should exercise its discretion
CONCLUSION
that this Court grant her motion and sever her trial from that of co-defendant
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Respectfully submitted,
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CERTIFICATE OF CONFERENCE
I hereby certify that I conferred with AUSA Gregg Costa who stated that he
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the above and foregoing was
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