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Monday, May 27, 2024 | Back issues
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Receiver for Stanford Ponzi Scam Sues Lawyers

DALLAS (CN) - Attorneys formerly with Greenberg Traurig and Hunton & Williams helped R. Allen Stanford get away with his $7 billion Ponzi scheme, the court-appointed receiver claims in a federal class action.

Receiver Ralph Janvey, the Official Stanford Investors Committee, et al. sued both law firms and attorney Yolanda Suarez, of Miami.

The plaintiffs claim Stanford could not have perpetrated the scheme on his own, that he needed "corrupt regulators in his chosen offshore jurisdiction of Antigua, shady accountants, and skilled and complicit lawyers to help him."

"He found the perfect match in Carlos Loumiet, a Miami international banking lawyer who was Stanford's kindred spirit and legal facilitator for over twenty years, and Yolanda Suarez, Loumiet's protégé who rose to become Stanford's chief of staff and right hand," the 172-page complaint states.

Louimet was Stanford Financial Group's outside general counsel from 1988 to 2009, with the first 13 of those years spent as a partner at Greenberg, the complaint states. When he left for Hunton in 2001, he took Stanford's business with him.

"While at Greenberg and later Hunton, Loumiet materially assisted Stanford's global Ponzi enterprise in three essential ways," the complaint states. "(i) he helped Stanford take over the tiny, impoverished Caribbean island of Antigua and thereafter control the notoriously corrupt Antiguan government in order to establish a 'safe haven' where Stanford could operate above the law; (ii) he assisted Stanford to establish all of his U.S. marketing and sales 'feeder' offices, including the illegal offshore 'trust' representative offices in Miami, Houston and San Antonio whose sole purpose was the sale of SIBL [Stanford International Bank Ltd.] CDs to Latin American investors and ultimately funnel billions of dollars into Stanford's Ponzi scheme; and (iii) he and his law firms helped Stanford structure the transactions through which Stanford 'invested' the money he pilfered from SIBL, including massive investments in Caribbean real estate and speculative venture capital investments that eventually even included a very unsuccessful and expensive movie project."

Janvey claims Louimet not only knew Stanford was under federal investigation, but showed Stanford how to evade federal laws while operating primarily from U.S. soil, essentially providing the framework for the Ponzi scheme.

"In short, Loumiet's and Suarez's fingerprints are all over the Stanford Ponzi scheme from beginning to end, and to tell the story of Loumiet's and Suarez's involvement with Stanford is to tell the story of the Stanford Financial Group itself," the complaint states.

Janvey claims Greenberg Traurig helped Stanford buy his way into Antigua after he was forced to surrender his bank licenses for Montserrat in 1990. The receiver claims Stanford fled because he could not exert absolute control over Montserrat's government.

"When Stanford fled to Antigua in December 1990, Antigua had the reputation of being the most corrupt island in the Caribbean, which reputation was well known to Loumiet and his partners at Greenberg, who thereafter constantly forwarded news articles about Antigua's reputation as a cesspool of corruption, fraud and money laundering to Stanford," the complaint states.

"Stanford's goal from the beginning was to take control of Antigua and use it as the new base for his offshore schemes. He found a willing partner in Loumiet who viewed the corrupt island nation as the ideal location for a massive experiment in private sector self-governance. Loumiet's views are reflected in a February 24, 1998 e-mail he sent to his partners at Greenberg regarding an opportunity to write laws for Antigua's offshore gambling sector, wherein Loumiet referred to Antigua as being 'a small enough jurisdiction to make it ideal as a 'laboratory' for this type of effort.'" Janvey claims Louimet, Greenberg Traurig and Hunton & Williams helped Stanford "hijack" Antigua to use as his safe haven, gaining leverage through several multimillion-dollar loans that encumbered the country.

"In doing so, defendants helped Stanford to use his customers' money to install himself as the 'shadow' government in Antigua, and even helped Stanford write Antiguan laws to regulate his own business activities," the complaint states. "Defendants provided this assistance despite Loumiet's knowledge of Stanford's illicit activities and despite Greenberg's own rampant conflicts of interest whereby it aided a private sector client (Stanford) to loan money to an impoverished, third world government (Antigua) which was the sole regulator of the client's global business enterprises, while at the same time representing the same government in writing the laws designed to regulate their client (Stanford), for which government work Greenberg was actually paid by the client: Stanford."

Janvey claims that in 1991, Greenberg helped Stanford silence Financial Times journalist Tony Hetherington, who published articles questioning how SIBL could be selling bank products from the United States, as it had no banking license there.

Janvey says Hetherington hypothesized "that Latin American depositors might be tricked by such advertisements into believing that, in dealing with [SIBL], they were dealing with 'Texans who have been checked out by the authorities and granted a banking license.'"

He claims that the Financial Times published an apology after receiving a threatening letter from Stanford's father, James Stanford, which allegedly was drafted by Louimet, and demanded a full public retraction.

Janvey claims that Greenberg Traurig's records show that Stanford corrupted Antiguan officials by giving them loans and kickbacks disguised as political contributions.

"As just one example, Loumiet and Greenberg were aware that Stanford Financial Group had loaned $30,000 to the Antiguan Minister of Finance responsible for regulating GIBL [Guardian International Bank Ltd., SIBL's predecessor], Molwyn Joseph, in February 1992, evidenced by a Promissory Note found in Greenberg's files. Joseph, who as the Antiguan Minister of Finance was charged with overseeing GIBL, never paid a dime on that loan," the complaint states.

Janvey and the Investors Committee seek actual and punitive damages for negligence, aiding and abetting breaches of fiduciary duty, breach of fiduciary duty, fraudulent transfer, unjust enrichment, negligent retention and negligent supervision.

The proposed investor class seeks actual and punitive damages violations of the Texas Securities Act, aiding and abetting breach of fiduciary duty, aiding and abetting participation in a fraudulent scheme, and conspiracy.

Janvey is a partner with Krage Janvey, of Dallas.

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