Law Firm Owes Stanford Ponzi Victims $35M

DALLAS (CN) — Victims of R. Allen Stanford's $7 billion Ponzi scheme on Friday settled class claims against the Chadbourne & Parke law firm for $35 million and dismissed claims against Stanford's former general counsel.

U.S. District Judge David Godbey granted the parties' agreed motion to dismiss without prejudice to investors' claims against former Stanford Financial general counsel Pablo M. Alvarado.

Lead plaintiff Samuel Troice sued Chadbourne & Parke, Alvarado, the Proskauer Rose law firm and former Chadbourne & Proskauer partner Thomas V. Sjoblom in 2009 in Federal Court.

The plaintiffs claimed Sjoblom knew about Stanford's scheme as early as August 2005, but turned a blind eye and helped stall an SEC investigation by using legal tactics to avoid releasing the company's books.

Court-appointed receiver Ralph Janvey and the Official Stanford Investors Committee filed a separate federal lawsuit against both law firms and Sjoblom in 2013.

Stanford, 65, was sentenced in 2012 to 110 years in federal prison for 13 of 14 counts of conspiracy, wire fraud and mail fraud.

In a May 2 Status Report, the plaintiffs say they, Janvey and the committee reached a $35 million settlement with Chadbourne. They say the settlement was reached before the Fifth Circuit ruled in March that immunity shields both law firms in the case.

The Fifth Circuit dismissed based on a 2015 Texas Supreme Court ruling that concluded "fraud is not an exception to attorney immunity" under state law.

Since his appointment, Janvey has tried to recover investor money by filing several dozen lawsuits against defendants that include the Miami Heat basketball team, New Orleans-based law firm Adams & Reese, Baton Rouge-based law firm Breazeale Sachse & Wilson, the University of Miami, Texas A&M University, the PGA Tour, the ATP tennis tour, and several Stanford-entity investors, members and officers.

Stanford's victims were dealt another blow by the Texas Supreme Court in April when it concluded that Janvey could not demand the return of $6 million a Stanford entity paid to The Golf Channel for advertising, because the ads had "reasonably equivalent value" under state law.

Follow @davejourno

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