Texas financier R. Allen Stanford, who is awaiting trial on allegations he swindled investors out of more than $7 billion, was rushed to the hospital yesterday morning with his heart racing at more than 300 beats a minute — three to five times the normal rate.

Stanford’s attack came on the same day that one of his lieutenants, James Davis, pleaded guilty to conspiracy to commit securities fraud, among other charges.

Stanford, 59, who denies accusations that he defrauded investors through his Caribbean bank, Stanford International Bank and who was scheduled to appear in a separate hearing, has been detained on the grounds that he represents a flight risk. He was taken by ambulance to the Conroe Regional Medical Center in Texas, seven miles south of his jail cell.

The defendant’s condition was unknown and he was still undergoing testing, said Alfredo Perez, of the US Marshals Service of the Southern District of Texas.

Stanford’s lawyer, Dick DeGeurin, didn’t respond to several requests for comment.

Last month DeGeurin demanded cushier digs in downtown Houston for his client, complaining the current jail cell in Conroe, Texas, had no air conditioning despite the sweltering heat and “outdoor temperatures of 100 or more.” DeGuerin also said the cell suffers frequent power outages and can be packed with as many as 10 people at a time.

Davis, 60, was the chief financial officer of Stanford International, the Antigua-based financial company where authorities say Stanford and his cohorts sold $7 billion worth of phony certificates of deposit.

The plea agreement said Davis had been covering up and lying for Stanford as far back as 1988. According to the authorities, Davis falsified documents that allowed the Texan business to use investors’ CD money to take out $2 billion in loans.

He also wired money to Stanford for bribes paid to Leroy King, the bank’s primary regulator in Antigua, according to the agreement.

The plea agreement describes a strange “blood oath brotherhood ceremony” Stanford performed with King and another Antigua regulator to ensure they remain faithful to him and the bank.

As part of the plea agreement, Davis is expected to cooperate fully with investigators. Sentencing is scheduled for Nov. 20.

Ex-Stanford CFO Davis Pleads Guilty in Fraud Case (Update2)

James M. Davis, chief financial officer of Stanford Financial Group Co., pleaded guilty to helping R. Allen Stanford in a $7 billion Ponzi scheme and prosecutors said he will testify against his former colleagues.

Davis, 60, admitted three felony counts today before U.S. District Judge David Hittner in Houston and agreed to forfeit $1 billion. Davis has been “cooperating like crazy” with authorities investigating the company, said his defense attorney, David Finn of Dallas.

“Mr. Davis knows he’s looking at very, very stiff punishment down the road,” Finn said after the plea hearing. “Probation is out of the question in this case.”

The Justice Department will request leniency in Davis’s sentencing if it deems his cooperation “sufficient,” Assistant U.S. Attorney Paul Pelletier told Hittner. Davis has met for hundreds of hours with federal investigators, helping them find hundreds of millions of dollars that he claimed Stanford stashed in European banks, Finn said.

“You’ll see just how far back this goes,” Finn said of the alleged fraud. “This didn’t get cooked up overnight.”

Stanford, the company founder who is being held without bail, was to appear before Hittner later today for a hearing on his legal defense. Instead, he was taken to a medical center with what a court aide said was an elevated pulse rate.

‘Getting Together’

“I think it had everything to do with my client and Hittner and the government getting together in court today,” Finn said of Stanford’s health emergency. “You could call it serendipity, but what are the odds?”

Stanford’s assets were frozen by the court at the U.S. Securities and Exchange Commission’s request and his current lawyer has asked to leave the case, saying he might not get paid. A U.S. grand jury indicted Stanford and Chief Investment Officer Laura Pendergest-Holt for fraud in June.

Davis waived indictment and was charged separately with conspiracy to commit mail, wire and securities fraud, as well as mail fraud and conspiracy to obstruct an SEC investigation.

The SEC in a civil suit accused Stanford, Davis and Pendergest-Holt of running a fraud scheme centered on the sale of certificates of deposit by Antigua-based Stanford International Bank Ltd. Stanford and Davis promised “improbable if not impossible” returns on the CDs, the SEC said.

After today’s hearing, Finn told reporters Davis’s cooperation included a visit to his family farm in rural Mississippi, where he helped a government dive team search for evidence in tanks and ponds.

Not a Dime

Asked what the nature of that evidence was, Finn replied, “you’ll find out.” Davis is working as a laborer on a Michigan farm, where he’s being paid $10 an hour, and is penniless, his lawyer said.

“He doesn’t have a dime,” Finn said. “He can’t even pay me.”

Since his July 13 arraignment, Davis has been free on $500,000 bond, which includes a $5,000 cash deposit. He faces as many as 30 years in prison and won’t be sentenced until the government no longer needs his cooperation.

Finn said Davis’s cooperation has focused on two fronts: locating assets Stanford stashed overseas and helping the U.S. extradite Antigua’s top banking regulator, Leroy King, who was indicted along with Stanford for allegedly taking bribes to conceal the fraud.

“Cash payments were being made under the table in an airplane hanger by Allen Stanford to the regulator,” Finn said.

King, who is under house arrest, is scheduled for an extradition hearing in Antigua next month, according to prosecutors.

The case is U.S. v. Davis, 4:09-cr-00335, U.S. District Court, Southern District of Texas (Houston).

Blood Oath’ Sealed Stanford Deal

At a meeting in 2003, they became blood brothers, cutting their wrists and mixing their blood in a “brotherhood ceremony” that Mr. Stanford’s chief financial officer said promoted an elaborate scheme to hide a multibillion-dollar fraud from American and other regulators.

The assertion that the two took a “blood oath” was laid out in a plea agreement signed by the officer, James M. Davis, and filed Thursday. After the pact, Leroy King, Antigua’s chief banking supervisor, called Mr. Stanford “Big Brother.” He received Super Bowl tickets, valued at thousands of dollars, for himself and his girlfriend. And he accepted regular bribe payments from a secret Swiss bank account that Mr. Davis said he was told to handle by Mr. Stanford.

The unusual twist to the case, in which Mr. Stanford is accused of operating a multibillion-dollar Ponzi scheme, was disclosed by Mr. Davis as he pleaded guilty on Thursday to fraud and conspiracy in Federal District Court in Houston. Mr. Davis, who oversaw the movement of vast sums of money at Stanford International Bank, also said in a plea agreement that Mr. Stanford ordered him to report false revenue and false investment portfolio balances to banking regulators as far back as 1988, when Mr. Stanford ran an offshore bank on the Caribbean island of Montserrat.

“I did wrong. I’m sorry. I apologize. And I take responsibility for my actions,” Mr. Davis said after the hearing.

Mr. Stanford was also supposed to appear in court on Thursday, but he was hospitalized in the morning after his pulse rate soared, his lawyer said.

While he has repeatedly denied accusations that he ran a Ponzi scheme involving certificates of deposit issued by Stanford International Bank, he has also insisted that if anything illegal did happen, it must have been Mr. Davis’s fault.

Mr. Davis, who had been a friend of Mr. Stanford’s since they were roommates at Baylor University in Waco, Tex., started his own church in Mississippi and led prayers before bank business meetings. His lawyer, David Finn, said Mr. Davis was now working on a family farm in Michigan doing manual labor for $10 an hour as an expression of penance. He now faces up to 30 years in prison.

“He had a very heavy heart,” Mr. Finn said. “He was very contrite, and not all of my clients are.”

The plea agreement and a court presentation on Thursday by prosecutors repeated many facts that were outlined in June in an indictment of Mr. Stanford, several Stanford aides and Mr. King. Mr. Stanford and others are accused of defrauding 30,000 investors of $7 billion, filing false reports to regulators and investors, diverting more than $1.6 billion into undisclosed personal loans to Mr. Stanford, and conspiring to obstruct an investigation by the Securities and Exchange Commission.

But the plea agreement offered an assortment of new details, particularly about the relationship between Mr. Stanford and Mr. King, who ran Antigua’s Financial Services Regulatory Commission for much of the last decade. He has been arrested in Antigua and is awaiting extradition to the United States.

Shortly after their 2003 blood-brother ceremony, which also included a second, unnamed Antiguan regulator, Mr. Stanford complained that two Antiguan regulators who worked for Mr. King were “becoming aggressive and suspicious in their examination” of the Stanford bank on the island, the plea agreement said. Both employees “soon thereafter were reassigned or replaced,” Mr. Davis said in the plea agreement.

To show appreciation for Mr. King’s services, Mr. Stanford paid $8,000 for tickets to the 2004 Super Bowl game in Houston so the regulator could take his girlfriend to the event. The next year, in June, Mr. King showed Mr. Stanford a confidential letter he had received from the S.E.C. seeking information about the Stanford bank’s certificates of deposit investment portfolio, stating that the agency had evidence to suggest the bank was engaged in a “possible Ponzi scheme.” Mr. Stanford and an unnamed aide then drafted “a false and misleading response” to the S.E.C., according to the plea agreement.

In September 2006, Mr. King tipped Mr. Stanford off to another letter from the S.E.C. Mr. Stanford, Mr. Davis and others proposed various responses designed to mislead the American regulators, which Mr. King was expected to transmit back to the S.E.C.

Mr. King also helped mislead regulators of the Eastern Caribbean Central Bank when they began raising questions about Mr. Stanford’s bank, the plea agreement said. He faxed a proposed response to the Caribbean regulators to an unnamed lawyer working for Mr. Stanford. In it, Mr. King joked in a handwritten note: “Please do not bill me (laugh), Thanks a million, Lee.” The note was taken as an oblique reference to bribes already paid, according to the agreement.

Mr. King, who holds American and Antiguan passports, is reviewing legal documents and has not yet publicly responded to the charges against him, according to Attorney General Justin Simon of Antigua and Barbuda. In an interview in February, just after Mr. Stanford’s offices in Houston were raided by federal authorities, Mr. King said, “I am absolutely sure that my banking system is clean.”

Mr. Simon said in an interview that he had become aware of the blood-brotherhood ceremony from his own sources. “It is believable,” he said. “As far as how many people are involved, we are still investigating.”

By the middle of 2008, the agreement asserts, Mr. Stanford, Mr. Davis and others were scrambling “desperately” to hide the details of their fraud by inflating the value of their assets on the books with “bogus real estate.” The conspirators “designed a real estate transaction wherein they would falsely inflate and convert an approximate $65 million real estate transaction in Antigua into a purported $3.2 billion dollar asset,” according to the agreement. But by January the S.E.C. was moving in fast, and when Mr. Davis met with Mr. King, “King appeared very stressed” and wondered if they could still hide their secrets. Mr. Davis tried to reassure him.

In an interview in April, Mr. Stanford said he gave Mr. Davis broad responsibilities to oversee investments. “If bad things were happening, he never brought them to my attention,” Mr. Stanford said. “He did his job and I stayed out of his hair.”

Mr. Finn acknowledged after Thursday’s plea hearing that Mr. Stanford would attempt to discredit his client during a future trial. “The only way he walks is if he can convince a jury that my client is the mastermind,” he said. “Allen Stanford uses people. Did my client allow himself to be used? Absolutely.”

Mr. Finn said it would be strange for his client to have run a fraudulent scheme to pay for Mr. Stanford’s lavish lifestyle when he was getting paid relatively little for his efforts. He said Mr. Davis had earned between $5 million and $6 million after taxes over the last decade, and was now virtually penniless.

Mr. Stanford’s lawyer, Dick DeGuerin, has asked for court permission to quit the case because his client can not assure that he will be paid. Mr. Stanford was supposed to appear in court for a hearing on whether he could retain a new legal team. Mr. Stanford has asked to be represented by two other lawyers, but they also have said they need assurances that they will be paid

Stanford in hospital with rapid heart beat

Allen Stanford, the accused swindler, was rushed to hospital from his prison cell in Texas at 5.50am, Dick DeGuerin, his lawyer, confirmed today.

The Texas-born financier and cricket impresario was taken to Conroe Regional Medical Center with a rapid heart rate of more than 300 beats a minute.

Mr Stanford, 59, faces charges, which he denies, of defrauding US investors out of $7 billion (£4.3 billion), and was recently denied bail on the ground that he represented a flight risk.

He has been sharing a cell with about ten inmates at a prison in Conroe, Texas, where he has complained of the “intolerable” conditions with temperatures reaching 38C (100F).

“They have almost non-existent medical care there. A fellow cellmate almost died with rapid heart beat several weeks ago,” he said.

Mr DeGuerin was speaking on his way to a court hearing at 9am that was due to include Mr Stanford.

The lawyer is seeking to withdraw from the case because, among other reasons, he has yet to be paid.

“I don’t think the hearing can go ahead in Sir Allen’s absence,” he said.

Meanwhile, James Davis, Mr Stanford’s former finance director, pleaded guilty to fraud charges when he appeared in court today.