Houston-Based Receiver Files $1.8B Class Action Filed Against Law Firms Accused of Helping R. Allen Stanford Carry Out His $7B Ponzi Scam

Ralph Janvey, the Stanford receiver based in Houston, has filed a putative class action lawsuit against Hunton & Williams LLP and Greenberg Traurig LLP, two law firms accused of playing roles that allowed R. Allen Stanford to execute his $7B Ponzi scam. The securities complaint, which was filed in the U.S. District Court for the Northern District of Texas, is seeking $1.8 billion in damages and $10 million that it claims Stanford gave to the law firms during their years of working together. The plaintiffs are contending Texas Securities Act violations, aiding and abetting participation in a fraud scam, aiding and abetting breach of fiduciary duty, and conspiracy.

Also named as a defendant is Yolanda Suarez, who was not only a former Greenberg Traurig associate but also she served as Stanford Financial Group’s general counsel and later as chief of staff. Janvey says that Stanford could not have kept his scam going for over 20 years without these parties’ help.

Per the Texas securities case, Carlos Loumiet, an ex-Greenberg Traurig partner who later went to work for Hunton & Williams (he is now a DLA Piper partner and is not a defendant in this lawsuit), had a “very close personal relationship” with Stanford and played a part in helping the now convicted fraudster run his global scam. This included helping him establish sales and marketing offices in the US. Loumiet and Greenberg Traurig also allegedly helped Stanford set up the transactions that would allow the Ponzi mastermind to use the money he took from Stanford International Bank Ltd. in Antigua and invest them in “speculative venture capital” deals and property in the Caribbean. The law firm is also accused of giving Stanford securities law counsel and advice on a regularly basis.

After Louimet wen to Hunton, he and that law firm allegedly continued to help Stanford with the fraudulent activities. Because of Louimet and Suarez, contend the plaintiffs, Stanford was able to operate his scam outside the bonds of government oversight and regulations for over two decades.

Also named as a plaintiff is the Official Stanford Investors Committee, which is tasked with supervising the receivership of Stanford’s properties and assets. Meantime, class certification is being sought for investors that as of February 2009 had purchased or were still in possession of Stanford CDS or had accounts at SIBL. The proposed class wants actual and punitive damages.

Greenberg Traurig says the class action securities claims are “false and baseless.” The firm claims that it was unaware that any illegal conduct was taking place.

The $7B Stanford Ponzi fraud involved the selling of CDs from the Antigua-based bank so that Stanford could fund a number of businesses that failed, support his lavish lifestyle, and bribe regulators. The former tycoon was convicted for his crimes and sentenced to 110 years behind bars.

Receiver for Stanford Ponzi Scam Sues Lawyers, Courthouse News Service, November 16, 2012
Janvey Files $1.8B Class Action Against Law Firms Over Stanford Work, BNA/Bloomberg, November 28, 2012

Texas Securities Act

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