(Bloomberg News) R. Allen Stanford is being moved to a prison hospital for treatment of an anxiety-drug habit the Texas financier acquired in jail while awaiting trial on charges that he swindled investors of $7 billion.

"He is being transferred," said Chris Burke, a spokesman for the U.S. Bureau of Prisons. Stanford shipped out Feb. 14 from the federal lockup in Houston, where he has been detained as a flight risk since his arrest in June 2009.

Stanford, 60, denies all wrongdoing in connection with criminal and civil allegations that he cheated investors through a Ponzi scheme built on certificates of deposit issued by Antigua-based Stanford International Bank Ltd. Prosecutors claim the bank paid early investors "improbable, if not impossible" rates of return by taking funds from later CD buyers.

Stanford was scheduled to face a jury on 21 criminal counts last month in federal court in Houston, until U.S. District Judge David Hittner indefinitely postponed the trial after finding Stanford mentally unfit to rationally assist with his defense.

Hittner, in a Jan. 26 ruling, recommended Stanford be transferred to a prison hospital "such as the federal medical center in Butner, N.C."

The Butner medical facility is part of the same prison complex where Bernard Madoff is serving a 150-year sentence after admitting in March 2009 to running a Ponzi scheme in which investors lost as much as $20 billion in principal.

Drug Dependent

Three psychiatrists told Hittner that Stanford was incapable of participating in his own defense. They testified that Stanford has grown dependent on anti-anxiety and depression medications that were over-prescribed to him by the prison's medical staff.

The doctors also said Stanford may suffer lingering effects from a jailhouse beating that left him with a concussion and broken facial bones in September 2009.

Hittner ordered Stanford weaned from the drugs in a hospital run by the U.S. prison system and evaluated for continuing mental problems related to the concussion. Hittner told lawyers on both sides to continue to prepare for trial, which will be rescheduled once Stanford is determined to be medically competent to assist in his defense.

Prisoner Movements

Stanford's lawyer, Ali Fazel, declined to discuss his client's whereabouts, citing a court order banning public discussion of the case. Burke declined to identify Stanford's destination, citing prison bureau policy against discussing prisoner movements.

Denise Simmons, public information officer for the Butner prison complex, said yesterday that Stanford isn't at that facility. Simmons said she couldn't comment on whether his arrival is expected.

Madoff, who had been in the prison's hospital unit in 2009, has since returned to the general population of one of Butner's two medium-security units, Simmons said.

Trish Doty, public information officer at the Federal Detention Center in Houston, said Stanford's personal belongings and legal papers are being stored in her office until Stanford returns from drug rehab. Doty declined to identify the prison hospital that will treat Stanford.

"Whenever an inmate is out temporarily, we store their property because we know they're coming back," she said.

The case is U.S. v. Stanford, 09cr342, U.S. District Court, Southern District of Texas (Houston).