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Two former accounting executives at Stanford Financial Group Co. should be convicted of helping Texas financier R. Allen Stanford conceal the theft of billions of dollars from investors at his offshore bank, U.S. prosecutors told a Houston jury.

The government asked jurors to reject claims by ex-Chief Accounting Officer Gilbert Lopez, 70, and former Global Controller Mark Kuhrt, 40, that they were duped by Stanford and his finance chief into creating false financial statements, which investors relied on to buy $7 billion of fraudulent certificates of deposit from Antigua-based Stanford International Bank Ltd.

“Gil Lopez and Mark Kuhrt were faced with the same choice over and over again, to either help Allen Stanford lie to his customers and misuse their money or say ‘I don’t want to be part of it,’” prosecutor Jeffrey Goldberg said during closing arguments today. The men chose to “keep it secret and actively work to keep others from finding out about it.”

Lopez and Kuhrt, who went on trial on Oct. 17, are the last two Stanford executives to be criminally tried for their roles in a Ponzi scheme built on bogus CDs. Early investors were paid above-market returns with funds taken from later investors, and the accountants helped cover up the Stanford bank’s insolvency for years before U.S. securities regulators seized the operation in early 2009 on suspicion of fraud, prosecutors said.

Appealing Verdict

Stanford, 62, was convicted in March of masterminding the fraud scheme and is serving a 110-year sentence at a federal prison in Florida. He is appealing the verdict and his sentence.

Federal prosecutors told jurors that Lopez and Kuhrt meticulously tracked about $2 billion that Stanford “sucked out” of the bank to fund risky private ventures including Caribbean airlines, resort developments and international cricket tournaments. The accountants didn’t disclose these loans or additional funds that Stanford took to underwrite a lavish personal lifestyle of private jets, yachts and waterfront mansions, the government said.

Stanford told CD buyers their money was invested in conservative liquid assets and overseen by international money managers. Evidence at his jury trial showed that Stanford and his top deputy, finance chief James M. Davis, secretly controlled more than 80 percent of the bank’s investments, much of which was loaned to Stanford or used to underwrite his other businesses.

‘Massive Fraud’

“There’s no doubt whatsoever there was a massive fraud going on, but it was a Stanford and Davis fraud, not a Lopez and Kuhrt fraud,” Richard Kuniansky, Kuhrt’s lawyer, told jurors today. Stanford and Davis “withheld everything that was obviously criminal from their so-called partner in crime,” he said.

Jack Zimmermann, Lopez’s lawyer, also made the argument that Lopez and Kuhrt weren’t in the loop.

“Was there one witness who came here and told you Gil Lopez had access to the real numbers?” Zimmermann asked.

Jurors heard Lopez, Kuhrt and Davis testify during the four-week trial. Davis pleaded guilty to his role in the scheme in 2009, testified against Stanford at his trial and is awaiting sentencing.

Goldberg showed the jury two Power Point slides of what he claimed were lies Lopez and Kuhrt told under oath. All of these lies, he said, were told to protect “the hot secret, the criminal secret” that “the source of Mr. Stanford’s money and lifestyle was the bank” and the $2 billion of investors’ money the financier took for personal use.

The accountants’ lawyers said their clients testified truthfully and urged jurors not to believe Davis, whom Kuniansky called “one of the most despicable human beings.”

‘Trusted Them’

“The government is trying to attach criminality to all these complicated accounting issues,” Kuniansky said. “Looking in hindsight, of course there are things he should’ve done differently. But at that point in time, he trusted them.” Zimmermann asked jurors to question why the government didn’t cross examine Lopez when he testified, “especially since they believed he was lying.”

“A lying defendant is a prosecutor’s dream, but they didn’t ask him one question,” Zimmermann said. “Why not try to trip him up?”

Lawyers for Lopez and Kuhrt told jurors the accountants relied on investment returns provided by Stanford and Davis and never intended to create false financial records or break any laws. The accountants also lobbied Davis to disclose Stanford’s borrowings to investors and were overruled, they said.

‘Accounting Principle’

“Gil Lopez didn’t believe it was illegal not to disclose” loans Stanford took from the bank, as he considered it an internal dispute over accounting principles, Zimmermann said. “A violation of an accounting principle or practice is not a violation of criminal law.”

The accountants’ lawyers said Stanford was consolidating the private ventures he funded with investors’ cash onto the bank’s balance sheet in late 2008 and early 2009. The accountants were prevented from completing the rollup by the government seizure of Stanford’s companies, their lawyers said.

If convicted of all charges, each of the men faces a possible sentence of more than 20 years in prison.

The case is U.S. v Lopez, 4:09-cr-0342, U.S. District Court, Southern District of Texas (Houston).

(Updates with defense lawyer in eighth paragraph.)