* Law firms sued over representation of Allen Stanford
* Ponzi schemer sentenced to 110 years prison
By Terry Baynes and Jonathan Stempel
Jan 18 The U.S. Supreme Court on Friday accepted
appeals by law firms that once represented convicted swindler
Allen Stanford and were trying to avoid lawsuits by victims
seeking to recoup losses from his $7 billion Ponzi scheme.
Former Stanford clients had sued the New York-based firms
Chadbourne & Parke and Proskauer Rose, as well as Thomas
Sjoblom, a lawyer who worked at both.
These lawsuits, brought under state laws, accused Sjoblom of
obstructing a U.S. Securities and Exchange Commission probe into
Stanford, and sought to hold Chadbourne and Proskauer
responsible as well.
The insurance brokerage Willis Group Holdings Plc
was also sued over its alleged role in Stanford's fraud.
The defendants countered that the federal Securities
Litigation Uniform Standards Act, or SLUSA, precluded state-law
class actions involving alleged misrepresentations made "in
connection with" the purchase or sale of covered securities.
Stanford's fraud had been centered on the sale of
certificates of deposit by his Antigua-based Stanford
International Bank, and m u ch of the litigation centered on
whether these qualified as securities under the applicable laws.
In October 2011, Dallas federal judge David Godbey ruled
that SLUSA preempted the state law class-action litigation,
noting that many investors sold securities to invest in the CDs,
but the 5th U.S. Circuit Court of Appeals revived the cases.
Chadbourne, Proskauer and Willis appealed that decision to
the Supreme Court, saying that lower courts are split on the
issue, and that similar lawsuits over Bernard Madoff's Ponzi
scheme have also been barred by SLUSA.
Stanford is serving a 110-year prison sentence following his
sentencing last June. On Jan. 11, a
court-appointed receiver proposed that 18,000 of his defrauded
investors would receive an initial $55 million payment on their
claims, an average of roughly $3,000 per person.
The court could hear the appeal in April, and if it does
would likely issue a decision by the end of June.
The cases are Chadbourne & Parke LLP v. Troice et al, U.S.
Supreme Court. No. 12-79; Willis of Colorado Inc et al v. Troice
et al, U.S. Supreme Court, No. 12-86; and Proskauer Rose LLP v.
Troice et al, U.S. Supreme Court, No. 12-88.