Law firms will pay $3.7M to help settle suits over Ponzi scheme run by Allen Stanford
Two Louisiana law firms have agreed to pay a total of $3.7 million to help settle litigation brought by a court-appointed receiver and an investors committee related to a massive Ponzi scheme operated by onetime billionaire R. Allen Stanford.
Adams and Reese will pay $1 million and Breazeale Sachse & Wilson agreed to pay over $1.7 million to resolve claims that the two firms engaged in conduct that helped Stanford’s companies swindle investors, according to the Advocate.
The firms did not admit liability in court filings. “However, after years of protracted litigation, we felt it was in the best interest of the firm to settle this matter,” said Breazeale managing partner Scott Hensgens.
Adams and Reese declined to comment when contacted by the newspaper, saying that the case is still pending before a judge who must decide whether to approve the settlement.
The Am Law Daily (sub. req.) reported on the investors committee lawsuit (PDF) when it was filed in federal district court in Dallas, Texas, in February 2011.
The following year, Ralph Janvey, the Texas lawyer serving as receiver in the case, sued both firms over opinion letters that allegedly OK’d practices used by Stanford’s companies to sell worthless certificates of deposit to investors, according to the news articles. It asserted causes of action for claimed aiding and abetting, negligence and breach of fiduciary duty.
Kevin Sadler of Baker Botts is representing the receiver in the case and said Janvey is happy with the settlement.
“This case is but one of more than 50 that the receiver has pursued to recover funds for the benefit of the victims of the Stanford Ponzi scheme,” Sadler told Courthouse News in Wednesday email. “This settlement is in the best interests of those victims. The receiver will continue to prosecute his cases against other defendants who benefited from the Stanford Ponzi scheme.”
Related coverage:
ABAJournal.com: “Federal Judge Sentences Onetime Billionaire Allen Stanford to 110 Years in Long-Running $6B Fraud”
ABAJournal.com: “Investors fleeced in $6B Stanford scheme get a penny on the dollar from court-appointed receiver”
See also:
ABAJournal.com: “Stanford Investors Sue 2nd Law Firm, Ex-GC; Proskauer Partner Withdraws”
ABAJournal.com: “Law firms may be sued for allegedly aiding Ponzi schemer Stanford, SCOTUS rules”
