R. Allen Stanford, convicted in 2012 of running a $7 billion Ponzi scheme. (Photo by Aaron M. Sprecher/Getty)
A federal judge has dismissed a malpractice suit by the court-appointed receiver for victims of R. Allen Stanford’s Ponzi scheme against Proskauer Rose and Chadbourne & Parke, ruling that it lacked jurisdiction.
The receiver, Ralph Janvey of Dallas-based firm Krage & Janvey, accused the two firms—along with Thomas Sjoblom, who had served as a partner at each firm—of helping Stanford breach his fiduciary duties to investors.
Stanford was convicted in 2012 of running a $7 billion Ponzi scheme and sentenced to a 110-year prison term.
Defendants in the Stanford receiver’s suit filed a motion in February asking that the case be dismissed due to lack of jurisdiction, which U.S. District Court Judge Colleen Kollar-Kotelly granted late last week. She also denied Janvey’s request to transfer the case to federal court in Northern Texas.
Kollar-Kotelly wrote in her ruling that the “plaintiffs’ failure to recognize that the District of Columbia district court lacked jurisdiction over their lawsuit suggests that Plaintiffs filed their suit in this jurisdiction either in bad faith and/or as an attempt at forum shopping,” adding that the move might have been meant to circumvent Texas’ two-year statute of limitations for negligence claims in favor of D.C.’s three-year statute.
The judge further noted that Janvey and others had already filed dozens of lawsuits in Texas on behalf of the Stanford Receivership Estate, including a nearly identical one within the Northern District of Texas that was stayed pending her ruling. She said her dismissal of the suit filed in Washington, D.C., would not require plaintiffs to re-file the other cases.
Chadbourne spokesman David Schaefer said in response to Kollar-Kotelly’s ruling:
“We are gratified by the court’s decision and believe this is an important step toward the final resolution of these spurious claims.”
Proskauer did not respond to a request for comment.
Janvey filed his malpractice suit in January 2012, alleging that Proskauer, Chadbourne and Sjoblom helped Stanford evade regulatory oversight and obstruct an investigation by the Securities and Exchange Commission, therefore they are liable for malpractice.
Reached for comment, Janvey referred The Am Law Daily to Doug Buncher, counsel at Neligan Foley, who said via email that the receiver’s case against the law firms would proceed in Dallas federal court where a second action was filed and remains pending.
Lawsuits surrounding the Ponzi scheme and attempts to recover funds for the victims have been complicated by questions surrounding Sjoblom’s role, after he reportedly decided to cease representing Stanford and instead talk to federal prosecutors about him, according to a report in The American Lawyer in 2009. Sjoblom established his own law firm in Washington, D.C. after leaving Proskauer that same year. He did not respond to an email request for comment Wednesday.
A federal appeals court dealt the Ponzi scheme victims another setback earlier this month, ruling that they couldn’t file claims with the Securities Investors Protection Corporation for compensation for their losses, according to Reuters.