BigLaw firm isn't liable to investors for lawyer's work for Ponzi schemer, 5th Circuit rules
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A federal appeals court has ruled that Greenberg Traurig is immune from liability in a lawsuit by investors who lost money in a Ponzi scheme perpetrated by a client.
The 5th U.S. Circuit Court of Appeals at New Orleans ruled Wednesday that the law firm is immune under Texas law for its former lawyer’s representation of Texas billionaire R. Allen Stanford, the American Lawyer reports.
Under Texas law, a lawyer is immune from civil suits brought by nonclients for conduct that happened within the scope of the attorney’s representation of a client, the 5th Circuit said.
Stanford was accused of selling certificates of deposit for his Stanford International Bank and reissuing the funds to investors as if they were returns from investments. The scheme eventually collapsed. Stanford was sentenced to 110 years in prison in June 2012 for the Ponzi scheme that cost investors up to $7 billion.
Investors had sued over work done by then-Greenberg Traurig lawyer Carlos Loumiet, who had was outside counsel to Stanford. Loumiet is currently a partner at Nelson Mullins Riley & Scarborough, according to the American Lawyer.
The suit, filed in Dallas federal court, had claimed that Stanford could not have perpetrated the fraud without the help of skilled lawyers.
Loumiet has previously said he did nothing wrong and has never represented a client he knew to be involved in illegal activity.
The 5th Circuit previously ruled in March 2016 that Proskauer Rose and Chadbourne & Parke were immune in another class action brought by Stanford investors over the work of a different lawyer.
Before the 5th Circuit ruled, Chadbourne agreed to a $35 million settlement in that matter and another suit, although a trial judge did not immediately approve it. Proskauer reached a $63 million settlement to resolve claims by investor plaintiffs, a court-appointed receiver and an investor committee.