The Bail Reform Act of 1984 and the Presumption for Release on Bond

By: Houston Criminal Defense Attorney John Floyd and Paralegal Billy Sinclair

On June 18, 2009, a federal grand jury returned a 21-count indictment against Houston businessman and chairman of the Board of Directors of Stanford International Bank, Robert Allen Stanford (also known as “Sir Allen Stanford”). The indictment charged that Stanford conspired with others associated with his business enterprise, the Stanford Financial Group, to commit wire fraud, mail fraud, and obstruction of a Securities Exchange Commission investigation. The indictment essentially charged that Stanford and his co-conspirators were responsible for the loss or theft of nearly $1.1 billion investors had deposited through Certificates of Deposit into the Stanford International Bank.

Stanford’s case has repeatedly been linked in the news media to New York’s billionaire fraud investor Bernard Madoff who was sentenced by a federal judge on June 29, 2009 to a maximum term of 150 years in prison for embezzling as much as $50 billion from investors who trusted their money—and sometimes life-savings—with him. Stanford and his attorneys, however, have repeatedly denied any criminal wrongdoing and accused the government of going after him in the wake of the Madoff scandal because he was not considered a full time American citizen and was an easy target for federal prosecutors to use to deflect public criticism in late 2008 that the federal government had been “asleep at the wheel” while Wall Street investors like Madoff raped the nation’s financial institutions over the past decade.

Whatever the Government’s motives for launching its SEC investigation against him last year, it served to demonize him in the public eye, especially in Texas. Still, on June 25, 2009, U.S. Magistrate Frances Stacy, sitting in Houston, conducted a detention hearing to determine whether or not Stanford should be released on bail. After hearing the testimony of witnesses and reviewing the evidence against the man Forbes Magazine once estimated to be worth $2 billion, Magistrate Stacy granted Stanford a bond of $500,000 with a $100,000 cash deposit even though he posed a “risk of flight.”

The Eighth Amendment to the U.S. Constitution provides that “[e[xcessive bail shall not be required.” While this constitutional provision prohibits excessive bail, it does not create a right to bail. 1/ The Supreme Court has held that bail is excessive when a court sets it higher than that which is reasonably necessary to ensure a defendant’s presence at trial or to promote some other compelling governmental interest. 2/

The Bail Reform Act of 1984 governs federal court determinations about bail release. Under this act, codified in 18 U.S.C. §§ 3141-3150, once the Government had conceded, as it did in Stanford’s case, that its only interest is to prevent flight, the court must set bail in a sum designed to secure that goal, and no more. 3/

That is precisely what Magistrate Stacy did when she set the $500,000 bail with a $100,000 cash deposit condition. That bail was sufficient to ensure Stanford would not take flight to avoid prosecution before his trial. But the Government not only objected to this bail amount but was also not satisfied that Stanford had been granted bail at all. The Government filed a motion to revoke Magistrate Stacy’s grant of bail, and, on June 29, 2009, U.S. District Court Judge David Hittner conducted a hearing on the government’s motion.

In the wake of the overwhelming public and media support for the 150 year sentence imposed on Bernard Madoff the day before, Judge Hittner on June 30, 2009 issued an opinion offering the following reasons for revoking Magistrate Stacy’s grant of bail and ordering Stanford held without bail pending trial:

“In late 2008, the SEC issued a subpoena for Stanford to testify before the commission regarding the SEC investigation into SFG. On January 26, 2009, Stanford traveled from St. Croix, Virgin Islands to Tripoli, Libya and then on to Zurich, Switzerland, where he stayed until January 29, 2009. Stanford’s pilot testified this was an unusually lengthy stay compared to Stanford’s previous trips to Switzerland.

“Moreover, Stanford engaged in routine, almost continual, international travel on the fleet of six private jets and one helicopter belonging to SFG and its related companies. Testimony indicates these flights were often scheduled at the last minute and steps were taken to conceal Stanford’s whereabouts.

“Further, Stanford’s United States passport reveals his travel to more than thirty countries on five continents since 2005.

“Between January 2004 and February 18, 2009, Stanford engaged in almost non-stop travel across the globe.

“Stanford’s U.S. passport shows multiple occasions in which there is an exit stamp for Antigua but no corresponding entry stamp, or an entry stamp with no corresponding exit stamp.

“Stanford failed to disclose to Pretrial Services that he also possessed an Antiguan passport.

“At the June 25, 2009 hearing before the magistrate judge, Stanford stated he did not know where his Antiguan passport currently was located. At the June 29 hearing, it was made clear to the Court that Stanford indeed possessed two Antiguan passports, one of which was expired. Also, at the June 29 hearing, Stanford surrendered one Antiguan passport to the Court, indicating that a friend of Stanford had retrieved the passport from Stanford’s hangar apartment in Antigua in May.

“The whereabouts of the second, allegedly expired, Antiguan passport is unknown.

“It is clear that Stanford has numerous international contacts.

“Moreover, Stanford’s acquaintances have shown a willingness to provide him with financial support. For example, an individual Stanford had not met until April 2009 paid $36,000 for one year’s rent for an apartment in Houston for Stanford to live in pending his trial.

“Furthermore, the indictment alleges Stanford bribed Leroy King, Commission of the Antiguan Financial Services Regulatory Commission, to prevent detection of the alleged fraud [charged in the indictment].”

Those are the core reasons offered by Judge Hittner to deny Stanford request for bail. However, that decision seems to fly in the face of the longstanding constitutional principle that there is a presumption favoring pretrial release on bail. 4/ There’s no doubt that Stanford stands accused of very serious crimes, and could face up to 175 years in prison should he be convicted of those crimes. But the man has not been convicted and enjoys a constitutionally protected presumption of innocence until he is.

There is no convincing evidence in either the public record or in Judge Hittner’s decision that Stanford poses any danger to the community or that he poses any serious risk of flight. While he may have substantial international contacts, as Judge Hittner noted, there was no evidence presented at the June 29 hearing that any of these contacts would engage in criminal wrongdoing to shield Stanford from criminal prosecution in the United States.

The Government bore the bore the burden under § 3142(e) when it filed its motion to revoke Stanford’s bail to prove by a preponderance of the evidence that he posed a flight risk to the extent that no single condition or combination of conditions would ensure his presence at trial. The chronology of facts cited by Judge Hittner, which was presented by the Government, did not satisfy this well-established evidentiary standard.

Stanford’s attorney, Dick DeGuerin, has indicated they would appeal Judge Hittner’s ruling—and so they should. But appeals take time, and even if Stanford’s attorneys are successful in getting Judge Hittner’s decision set aside, their client will remain in jail during the process. It is a reasonable to say that the federal judge who imposed the maximum 150 year on Bernard Madoff considered the enormous public pressure brought to bear in that case. Given Judge Hittner’s tough, no nonsense reputation it is doubtful the decision to deny Stanford’s request for bail was influenced by public pressure rather than his understanding of the rule of law set forth under the Bail Reform Act of 1984. It is, however, interesting to note that the very judge who sentenced Madoff to the maximum sentence and called his crimes “extraordinarily evil” had ordered him released on bail prior to his guilty pleas and that Madoff, fully aware of his exposure to a potential lifetime of imprisonment, appeared in court.

If Bernard Madoff was legally entitled to bail as a federal judge found he was over Government objections, then Robert Allen Stanford is equally entitled to bail just as Magistrate Stacy concluded.

1/ United States v. Salerno, 481 U.S. 739 (1987)
2/ Stack v. Boyle, 342 U.S. 1 (1951)
3/ Salerno, supra.
4/ Boyle, supra.

By: Houston Criminal Defense Attorney John Floyd and Paralegal Billy Sinclair