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Federal judge dismisses charges against stanford shredders

February 16, 2010

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A Miami federal district court judge dismissed cases pending against two defendants standing trial for allegedly shredding documents related to the Allen Stanford case. In a well-publicized case, Stanford's former head of security and another security specialist were indicted federally for their involvement in shredding documents ordered not be destroyed that were being looked at by the SEC. Rafanello and Perraud were facing charges including obstruction of justice for their involvement. Allen Stanford is facing numerous charges including securities fraud, wire fraud, mail fraud, racketeering and money laundering for his part in the alleged running of a $7 billion "Ponzi Scheme". After federal authorities disbanded Stanford's financial operation, Rafanello and Perraud allegedly destroyed thousands of documents to allegedly thwart the SEC investigation. After the jury heard closing arguments presented by federal prosecutors and the two Miami criminal attorneys representing the defendants, the federal judge decided to dismiss all of the charges during the deliberation process.

The lawyers representing Rafanello and Perraud previously argued to motions to dismiss at the close of the government's case and at the close of the defendants' case. It is quite unusual for a judge to take a case away from a jury after the jury has been read their instructions and the evidence has been delivered to the deliberation room. Judge Goldberg said, "I'm not taking this lightly, as to the necessary element of intent which is necessary in every charge brought by the prosecution, the evidence is substantially lacking." The judge dismissed the case during the second day of jury deliberations. Intent had been the sole focus of the defense throughout the case and Judge Goldberg had mentioned several times that the evidence of intent was always thin to non-existent.

Throughout the trial, the lawyer representing Stanford was present to hear the testimony and see for himself the outcome of the case. Stanford's lawyer was excited about the result and called the prosecutor's case extremely weak. Although the case went well for these two defendants, it is highly unlikely the outcome will be the same for Stanford. With the number of "Ponzi scheme" cases now appearing on federal court dockets, the media attention will likely dictate a different result. Hundreds of people across the country have lost fortunes and in some cases, their entire lifesaving as a result of the organized schemes to defraud. Although the only major fraud case resolved to date is the unprecedented Madoff case, the other federal prosecutions should resolve by the end of the year. Federal dockets are much smaller and cases are fast-tracked to keep them that way.

What was the motive of the federal prosecutors to proceed with a case that they knew was weak. One can expect that the government hoped that the defendants would buckle under the pressure and provide testimony against Stanford. There is no evidence that plea agreements were ever discussed, but the government would have taken all the help they could get to prosecute Stanford in his fraud case. The case is the perfect example of not succumbing to pressure even if it means taking a case to trial. If state or federal prosecutors cannot prove case, why not make them prove it in court. Of course, there is always a risk to going to trial, yet a dismissal or a not guilty verdict sometimes outweighs the risks.

Stanford Document Shredders Acquitted by Judge as Jury Debated, The Miami Herald, February 13, 2010.
Categories: Federal Crimes
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