After $35M Chadbourne settlement, second law firm faces litigation over Stanford Ponzi scheme
Terms of a settlement reached earlier this year between Chadbourne & Parke and victims of R. Allen Stanford’s $7 billion Ponzi scheme have been revealed.
The law firm agreed to pay $35 million to resolve claims by both investors and a court-appointed receiver, in separate lawsuits, the plaintiffs say in a recent court filing (PDF), according to the Am Law Daily (sub. req.) and Courthouse News. Meanwhile, in response to an agreed motion, a federal judge in Dallas dismissed without prejudice the investors’ claims against Chadbourne, two lawyers and a second law firm.
Former Stanford Financial Group general counsel P. Mauricio Alvarado was among those dismissed (PDF) from the suit.
However, the complex litigation saga continues. Following six years of court battle in which not only a federal appeals court but the U.S. Supreme Court rendered decisions, a new lawsuit was filed last month in federal court in Dallas. It seeks $5 billion from the second law firm, Proskauer Rose, and a former partner, Thomas Sjoblom, who served as outside counsel to Stanford’s companies and also previously worked at Chadbourne, the articles explain.
The pact with Chadbourne was reached before a 5th U.S. Circuit Court of Appeals ruling in March. It said both law firms were protected from liability to Stanford investors by a Texas attorney immunity law.
However, that 5th Circuit ruling left a window of opportunity for another lawsuit under the Texas Securities Act, plaintiff investors say. That is the basis of their April 28 suit (PDF) against Proskauer and Sjoblom in federal court in Dallas, which names two new individuals as lead plaintiffs, Sandra Dorrell and Phillip Wilkinson. The suit seeks class-action status.
Asserting causes of action for claimed aiding and abetting violations of that act, as well as aiding and abetting and/or participating in a breach of fiduciary duty, the plaintiffs seek compensatory and punitive damages from both Sjoblom and, on a respondeat superior theory, the Proskauer firm.
They allege that, as early as August 2005, Sjoblom had reason to know that “Stanford Financial was, at best, committing securities fraud through an unregulated investment company based in Houston, Texas that issued securities from an offshore bank in the most corrupt fraud haven in the Caribbean. At worst, Sjoblom already knew that Stanford Financial was running a fraud or Ponzi scheme.”
Stanford, 65, is serving a 110-year federal prison term.
The news articles don’t include comment from lawyers for the defendants.
ABAJournal.com: “Law firms may be sued for allegedly aiding Ponzi schemer Stanford, SCOTUS rules”