As we’ve noted before, the Stanford International Bank receiver has taken his lumps at the 5th U.S. Circuit Court of Appeals. Last month the appeals court denied his attempt to freeze the original investments of more than 500 Stanford investors, including some well-known athletes. It ruled that investors named in the complaint were not proper “relief-defendants,” since they were not shown to have had any inside information about the alleged fraud or to have improperly profited from the scheme.
But the receiver, Ralph Janvey of Krage & Janvey, and his lawyers at Baker Botts haven’t given up. On Monday, Janvey filed an amended complaint against 200 Stanford investors. This time, Janvey limited the defendants to those who made money off their original investments. In a footnote in the complaint, Janvey notes that he gave all of the defendants a chance to “settle the claims against them in exchange for payment of the amounts they received in excess of their investments” in Stanford CDs. The defendants named in the suit received more than $545 million in CD proceeds, according to the complaint.
On Tuesday we spoke to John Donnelly at Cozen O’Connor, whose investor client was on the winning side of last month’s 5th Circuit ruling and was not named in the amended complaint. Donnelly told us that Janvey’s latest complaint appears to be on more solid legal grounds, because it’s aimed only at investors who made money. But he also noted that Janvey is seeking more than just a return of the profits in his complaint. He’s also seeking the original investment made into the CDs, as well as attorney fees and costs.
“He is … perhaps using the aggressive approach to encourage others to settle on the terms set forth in the footnote,” Donnelly said. We’ll learn soon enough if his strategy pays off.
This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.