Proskauer, Hunton, Chadbourne Attack Antiguan Stanford Deal

By Maria Chutchian

Proskauer Rose LLP, Hunton & Williams LLP and Chadbourne & Parke LLP on Thursday challenged a settlement between the U.S. and Antiguan receivers in charge of compensating victims of Robert Allen Stanford's $7 billion Ponzi scheme, saying the deal exposes them to duplicative litigation.

The three firms join Greenberg Traurig LLP in urging a Texas court to reject the settlement, which will resolve disputes about jurisdiction over $300 million that Stanford had in the U.K., Switzerland and Canada.

Proceedings are already underway in the U.S. that are looking to hold the law firms liable with respect to their legal work for Houston-based Stanford Financial Group, alleging that they did not do enough to stop Stanford’s fraud.

Furthermore, the deal ignores earlier court-ordered prohibitions to the U.S. and Antiguan receivers pursuing independent lawsuits against lawyers and duplicating their efforts in the two nations' court systems, as well as terms that would allow the Antiguan receivers to conduct U.S. discovery without being subject to the personal jurisdiction of U.S. courts, the firms argue.

The settlement agreement includes a provision that allows the receivers and government agencies to pursue the same claims in different jurisdictions, the firms contend. This could force them to defend themselves against the same allegations both in the U.S. District Court for the Northern District of Texas and again in Antigua.

“This result creates the possibility of inconsistent judgments, and in any event would entail a waste of judicial resources and the resources of the parties,” Proskauer said in its objection to the deal.

The firms are asking the court to either deny the settlement should or remove the provision that allows for the duplicate claims.

Stanford rose to prominence as the head of the multinational financial services group that bore his name, whose banking arm was the Stanford International Bank in Antigua. The four firms that have objected served as outside law firms to some of Stanford's companies for a time, but all have denied any knowledge or culpability in his massive scheme.

After investigators in February 2009 alleged that the consistently above-average returns Stanford promised were possible only because of fraud, regulators in both Antigua and the U.S. appointed receivers to handle the claims. They had been at odds until the settlement was reached.

The settlement, announced March 12, would allow distributions to victims to go forward without litigation between the U.S. receiver and his counterparts in Antigua — joint liquidators Marcus Wide and Hugh Dickson of the accounting firm Grant Thornton — threatening to disrupt the process as it had in the past.

A hearing in Antigua on the proposed settlement, which requires U.S., U.K. and Antiguan approval, is scheduled for April 8.

Stanford was convicted of securities fraud in March 2012 and sentenced to 110 years in prison.

Proskauer is represented by Bruce W. Collins and Neil R. Burger of Carrington Coleman Sloman & Blumenthal LLP and by James P. Rouhandeh, Daniel J. Schwartz and Richard A. Cooper of Davis Polk & Wardwell LLP.

Chadbourne is represented by Harry M. Reasoner and William D. Sims Jr. of Vinson & Elkins LLP and by Daniel J. Beller, Daniel J. Leffell and William B. Michael of Paul Weiss Rifkind Wharton & Garrison LLP.

Hunton is represented by Richard A. Sayles and Shawn Long of Sayles Werbner and by Jeffrey D. Colman, David Jiménez-Ekman, April A. Otterberg Kaija K. Hupila of Jenner & Block LLP.

U.S. receiver Ralph Janvey is represented by Kevin M. Sadler, Scott D. Powers and David T. Arlington of Baker Botts LLP.

The case is Securities and Exchange Commission v. Stanford International Bank Ltd. et al., case number 3:09-cv-00298, in the U.S. District Court for the Northern District of Texas.

For a full and open debate on the Stanford Receivership visit:

http://sivg.org.ag/

The Stanford International Victims Group Forum