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Originally published Friday, February 24, 2012 at 12:27 PM

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No Stanford mistrial after erased hard drives talk

Computer hard drives belonging to the outside auditor of Texas tycoon R. Allen Stanford's Caribbean bank apparently were erased after the auditor's death, a prosecutor said Friday during the financier's fraud trial.

Associated Press

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HOUSTON —

Computer hard drives belonging to the outside auditor of Texas tycoon R. Allen Stanford's Caribbean bank apparently were erased after the auditor's death, a prosecutor said Friday during the financier's fraud trial.

The information about the hard drives, revealed as a prosecutor questioned a defense witness, prompted a failed mistrial request by Stanford attorneys who said they couldn't verify the claim and that the implication of criminal activity could irreparably harm their case.

"The jury has heard it and there is no way to take it back," said Ali Fazel, one of Stanford's attorneys.

U.S. District Judge David Hittner denied the motion for a mistrial but instructed jurors that questions from attorneys are not evidence.

Prosecutors allege Stanford's bank was at the center of a Ponzi scheme that took billions from investors and the financier bribed the auditor, C.A.S. Hewlett, with millions from a secret Swiss bank account to help hide the fraud.

Stanford is accused of orchestrating a 20-year scheme that bilked more than $7 billion from investors through the sale of certificates of deposit from his bank on the Caribbean island nation of Antigua. They also allege Stanford, whose financial empire was headquartered in Houston, lied to depositors by telling them their funds were being safely invested but instead spent it on his businesses and his lavish lifestyle.

Defense attorneys have tried to show the financier was a savvy businessman whose business empire was legitimate. They have blamed Stanford's ex-chief financial officer, who was the prosecution's star witness, for the alleged fraud.

Morris Hollander, a forensic accountant hired by Stanford's defense team, testified Thursday that his review of financial statements and other documents seemed to show the bank was being properly audited by Hewlett. But Hollander repeatedly said he had not seen any of the bank's actual accounting books and records and his conclusions were based only on prepared annual reports and other documents authorities allege were fabricated by Stanford.

While questioned by prosecutor Andrew Warren on Friday, Hollander was asked if he was aware Hewlett's firm had erased its computer hard drives.

This prompted Fazel to ask for a mistrial and for Hittner to ask the jury to briefly leave the courtroom.

Outside the jury's presence, prosecutor Gregg Costa told Hittner U.S. authorities were informed by Antiguan officials that two months after Hewlett died in January 2009, the auditor's daughter had someone erase the computer hard drives in her father's office on the island nation.

Costa said Stanford's attorneys had been given notice that if Hollander told jurors he never had access to Hewlett's work papers, prosecutors would go into possible explanations. Prosecutors said they were not implying wrongdoing with the question.

Fazel said the erasing of the hard drives could have been done to protect client information after the auditor's office was closed down but that the prosecution's question "clearly puts in the minds of the jury that something criminal" happened. Since defense attorneys have not spoken with the auditor's daughter and she is not testifying, there is no way to determine why the hard drives were erased, he said.

Hittner disagreed with Stanford's attorneys but told jurors the question had been withdrawn by order of the court. Prosecutors did not ask any more about the hard drives.

Stanford's attorneys have asked several other times during the five-week trial for mistrials on other legal issues and those requests also were denied.

Stanford is on trial for 14 counts, including mail and wire fraud, and could be sentenced to more than 20 years in prison if convicted. Once considered among the U.S.'s wealthiest people with an estimated net worth of more than $2 billion, he has been jailed without bond since being indicted in 2009.

Testimony was to resume Monday with another expert witness for the defense expected to take the stand.

While Stanford's attorneys have previously indicated the financier would testify, they say a final decision hasn't been made.

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