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Proskauer Targeted in Class Action Over Handling of Stanford Financial
The National Law Journal
August 31, 2009
A group of investor clients of Stanford Financial Group has filed a class action against Proskauer Rose and partner Thomas V. Sjoblom.
The lawsuit, filed Thursday in the U.S. District Court for the Northern District of Texas in Dallas, alleges that the law firm and Sjoblom participated in a massive investment fraud scheme that led to the intervention by the U.S. Securities and Exchange Commission and the appointment of a receiver for the investment firm.
The class action follows a guilty plea by former Stanford Chief Financial Officer James Davis made Thursday. In it, Davis appeared to implicate Stanford's outside attorney, Sjoblom, in a conspiracy to thwart an investigation by the SEC into Stanford's alleged fraud.
Sjoblom was assistant chief litigation counsel in the SEC's enforcement division prior to entering private practice.
Proskauer Rose issued a statement that said the lawsuit was "legally flawed and factually erroneous."
"There is no basis whatsoever for any claim that Proskauer, which functioned as defense counsel in a regulatory investigation, bears any responsibility for the fraud allegedly inflicted upon investors," the firm said in the statement.
A phone call to Sjoblom was not immediately returned.
In February, the SEC charged Stanford Financial Group, led by Allen Stanford, with orchestrating a "massive ongoing fraud" that included selling some $8 billion in high-yield certificates of deposit.
The class action, Troice v. Proskauer Rose, claims that the law firm and Sjoblom aided and abetted Stanford Financial's alleged fraud and that it conspired with Stanford Financial. It claims that under Texas law Proskauer Rose is liable for the $7 billion in total fraud losses.
Representing the plaintiffs are Edward C. Snyder and Jesse R. Castillo of Castillo Snyder in San Antonio.
"We know that one or two people cannot carry out a massive fraud of this scale," Snyder said.
