Dear KLS-Stanford Clients:
As you know, we filed the class action lawsuit against the United States government for its role in ignoring the Stanford Ponzi scheme and allowing the fraud to proceed unchecked for years. In response, the United States moved to dismiss the complaint on jurisdictional grounds. The United States is arguing that the government is immune from suit based on a statute that exempts it from liability for certain discretionary actions. The government claims that it has discretion over the methods by which it investigates and regulates the securities industry, and so it is immune from prosecution relating to its investigation and regulation of the Stanford entities. Indeed, the government has successfully used this argument to obtain the dismissal of a related Stanford case, as well as multiple similar cases against the government relating to the Madoff Ponzi scheme. However, our complaint does not allege liability on the basis of discretionary actions. Rather, our complaint alleges that the government failed to adhere to specific, mandatory requirements over which it had no discretion to ignore. This argument is fully explained and explored in our opposition to the motion to dismiss which we filed on Friday.
Attached is a copy of the government’s motion to dismiss and our opposition. The government will now have an opportunity to file a brief in reply to our opposition, and then the Court will rule on the motion. We are optimistic that the Court will rule in our favor, but are prepared to immediately appeal should the Court grant the motion to dismiss. We will provide another update as soon as the Court rules on the motion. If you have any questions, please do not hesitate to contact us.
Sincerely,
The KLS-Stanford Team
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