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

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

Four co-defendants in the original June 2009 indictment were also dropped from the amended indictment. They are scheduled to go on trial after Stanford's trial.

Stanford, who has denied wrongdoing, has been in federal custody since June 2009. It was unclear why the case was narrowed. The Department of Justice was not available to comment.

Prosecutors accused Stanford, 61, of running a fraud centered on the sale of bogus certificates of deposit issued by Stanford International Bank in Antigua.

They said 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.

The new indictment accused Stanford of five counts of mail fraud and five counts of wire fraud.

It also charged him with obstructing a related probe by the U.S. Securities and Exchange Commission, and conspiring to obstruct the SEC, commit mail fraud and wire fraud, and commit money laundering. The conspiracy charge concerning mail and wire fraud originally covered securities fraud as well.

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.

The court has 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 SEC filed a related civil lawsuit in Dallas federal court in February 2009.

In January, U.S. District Judge David Hittner ruled Stanford incompetent to stand trial, and ordered him moved to a prison hospital to treat an addiction to anti-anxiety medication.

Since February, Stanford has been at a hospital at the Butner Federal Correctional Complex in North Carolina, the same complex that houses convicted swindler Bernard Madoff, prison records show.

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)

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