Federal prosecutors have narrowed their criminal case against Allen Stanford, the Texas financier accused of running a $7 billion Ponzi scheme.

The government filed an amended, 14-count indictment in U.S. District Court in Houston on Wednesday that drops five mail fraud counts and two wire fraud counts. It also dropped part of a conspiracy count.

Stanford, 61, could still face as much as 20 years in prison if convicted on any of the 10 fraud counts in the revised indictment. No trial date has been set.

Prosecutors have accused Stanford of defrauding investors who bought bogus certificates of deposit issued by his Antigua-based Stanford International Bank Ltd.

They have said that the one-time billionaire used proceeds in part to fund other ventures and a lavish lifestyle that included several yachts and private jets, and homes around the world.

Stanford, who has denied wrongdoing, has been in federal custody since June 2009.

It was unclear why the case was narrowed and the other defendants were dropped. U.S. Department of Justice spokeswoman Laura Sweeney declined to comment, citing a court-imposed gag order.

We are studying it, said Ali Fazel, a lawyer at Scardino & Fazel in Houston who is representing Stanford. It appears they have tried to narrow the indictment to focus on him. He declined further comment, citing the gag order.

Four co-defendants in the original June 2009 indictment were also dropped from the new indictment. They are scheduled to go on trial after Stanford. Lawyers for these defendants did not immediately return calls for comment or declined to comment.

CLEANER CASE

Stanford now faces five counts of mail fraud and five counts of wire fraud.

He is also charged with obstructing a U.S. Securities and Exchange Commission probe, and conspiring to obstruct the SEC, commit money laundering, and commit mail fraud and wire fraud. The last charge originally covered securities fraud as well.

It may create a cleaner, less complex case so that a jury can focus on Stanford and not get sidetracked, said Michael Weinstein, who chairs the white-collar practice at the law firm Cole, Schotz, Meisel, Forman & Leonard PA in Hackensack, New Jersey.

It is also possible that the original case the government brought did not pan out as expected, said Weinstein, who is not involved in the Stanford case.

Mark Godsey, a law professor at the University of Cincinnati, said, There is a decent chance some of the other defendants will testify against Stanford.

The SEC had filed a related civil lawsuit against Stanford in Dallas federal court in February 2009.

In January, U.S. District Judge David Hittner ruled Stanford incompetent to stand trial.

Stanford has since February been at a hospital in the Butner Federal Correctional Complex in North Carolina to treat an addiction to an anti-anxiety medication he developed while in jail. Butner also houses convicted swindler Bernard Madoff.

The Houston court set May 19 for Stanford's arraignment on the new indictment. Fazel said that date would be changed because someone who is incompetent cannot be arraigned.

The case is U.S. v. Stanford, U.S. District Court, Southern District of Texas, No. 09-00342.

(Additional reporting by Anna Driver in Houston; editing by Andre Grenon)

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