(CN) – The Fifth Circuit upheld settlement agreements stemming from R. Allen Stanford’s Ponzi scheme after a group of objectors claimed that the deals were reached prematurely while a “far greater recovery was possible.”
A federal judge appointed Ralph Janvey as a receiver “to immediately take and have complete and exclusive control,” in order to find and reclaim money the scheme paid to “winning investors.”
“The receiver has pursued persons and entities allegedly complicit in Stanford’s Ponzi scheme,” Monday’s ruling from the federal appeals court states. “Through settlements with these third parties, the receiver retrieved investment losses, which it then distributed pro rata to investors through a court-supervised claims process. Four years into this ongoing process, the receiver sued two of Stanford’s insurance brokers as participants in the fraudulent scheme. As with the receiver’s other suits, monies it recovered from this suit would be distributed by the receiver pro rata to investor claimants.”
Litigation of the Ponzi scheme took years, but eventually insurance brokers agreed upon a “complete peace,” and agreed to the settlement. Believing they could have recovered 100% of their investments, the objectors took issue, however, with the trial court’s discretion to enter the bar orders.
The New Orleans-based appellate panel meanwhile upheld the settlements Monday, calling the objectors claims of potential full recovery their investments “speculative.”
“The settlement was reached after years of investigation and litigation,” U.S. Circuit Judge Patrick Higginbotham wrote for the court. “There was no certainty in the outcome of the Receivership Action. The defendant brokers contested liability and insist they would continue to do so if the settlements are terminated.“