Spencer Barasch as the SEC’s assistant enforcement director in Fort Worth during the federal government’s Enron-related trial of accounting giant Arthur Andersen in 2002. (Photo by James Nielsen/Getty)
Spencer Barasch, the embattled longtime head of Andrews Kurth’s corporate governance and securities practice in Dallas, is preparing to leave the firm just weeks after it settled a major malpractice case over its representation of an affiliate of convicted Ponzi schemer R. Allen Stanford.
An entry for Barasch on the rolls of the State Bar of Texas is now blank, and his profile on Andrews Kurth’s website was taken down earlier this month. An Andrews Kurth spokeswoman confirmed to The Am Law Daily that Barasch would soon leave the firm, which provided a statement from managing partner Robert Jewell espousing support for its soon-to-be-former partner.
“Spence Barasch is still a highly valued member of Andrews Kurth; however, he is in the process of transitioning his legal practice,” said Jewell, who also serves as chair of the firm’s executive committee. “Under those circumstances, we have agreed that it’s best not to continue to publish his website biography during the transition period. The firm continues to fully support Spence in all of his endeavors.”
A phone call and email to Barasch were not immediately returned by the time of this story. His attorney, former top federal prosecutor Paul Coggins, who now serves as head of the white-collar criminal defense and internal investigations practice at Locke Lord, did not immediately return a request for comment about his client’s departure from Andrews Kurth, whose website bears the motto “Straight Talk Is Good Business.”
The Am Law Daily reported back in 2011 on a malpractice suit filed against Andrews Kurth by Walton Houston Galleria Office, a Houston-based real estate investment firm backed by billionaire Neil Bluhm. The civil complaint sought $50 million in damages against the firm after accusing it of neglecting to inform Walton Houston Galleria about its work for another client, Stanford Group Holdings, a Stanford-owned entity that Andrews Kurth sided with in a real estate dispute because the firm allegedly wanted to get more of the financial services company’s legal work. (Stanford himself was convicted in 2012 of running a $7 billion Ponzi scheme—the second-largest in U.S. history after Bernard Madoff’s massive fraud—and is now serving a 110-year prison sentence.)
In mid-June, Andrews Kurth and Walton Houston Galleria agreed to settle their malpractice case on confidential terms after a week of trial, according to a story at the time by sibling publication Texas Lawyer. Thomas Ajamie, a former Baker Botts partner who founded his own Houston- and New York-based litigation shop in 1997, represented Walton Houston Galleria in the case. Ajamie, profiled by The American Lawyer in 2010 for his role winning a $112 million RICO claim, declined to comment on Barasch or Andrews Kurth when contacted by The Am Law Daily. Murray Fogler, a partner at Houston’s Beck Redden who advised Andrews Kurth in the malpractice litigation, did not respond to a request for comment on the matter.
The underlying suit came a year after a 151-page SEC inspector general’s report excoriated Barasch—a former regional enforcement director in the regulator’s Fort Worth office—for failing to appropriately investigate Stanford before he left the commission in 2005. In January 2012, Barasch agreed to pay a $50,000 fine as part of a civil settlement with the Justice Department into charges that he violated federal conflict of interest rules by representing Stanford after having previously participated in aborted probes as a regulator into the now disgraced financier.
Stanford investors separately sued the SEC two years ago this month, claiming that the agency had been negligent in investigating Stanford’s scheme, citing Barasch’s alleged role stalling a probe into his future client. In April, the U.S. Court of Appeals for the Fifth Circuit ruled in favor of the SEC by holding that plaintiffs had failed to show how the commission shirked its duties in the Stanford matter. Last week the U.S. Court of Appeals for the Federal Circuit dealt another blow to Stanford victims by rejecting the SEC’s bid to force the industry-funded Securities Investor Protection Corp. to cover Stanford investor losses.
As for Andrews Kurth, the firm kept Barasch as head of its securities practice, despite the fact that the SEC banned him in May 2012 from appearing before the regulator for one year as a result of his civil settlement earlier that year with his former employer. This past May, Dallas’ D Magazine wondered how much longer Andrews Kurth would continue to employ Barasch as the firm prepared to defend itself in a June trial against Walton Houston Galleria.
Vice Media, the Brooklyn-based upstart media company founded by Shane Smith that has industry giants like Rupert Murdoch salivating over a potential ownership stake, dedicated five separate stories between late April and mid-June on Andrews Kurth, Barasch and Stanford. Many of the stories, which range from how Barasch came to become an equity partner at Andrews Kurth and why the Am Law 100 firm wanted Stanford so badly as a client despite Barasch’s conflict issues (millions in potential legal fees were one incentive), are based upon internal Andrews Kurth emails and records, SEC files and depositions—including one by Andrews Kurth senior litigation partner Dennis Ryan—revealed as a result of the Walton Houston Galleria malpractice litigation.
Vice reports in detail on how Andrews Kurth began courting Barasch during his time as a senior enforcement official at the SEC’s outpost in Fort Worth, which was tasked with investigating the massive accounting fraud at now-defunct energy giant Enron. Barasch was a key figure in the Enron inquiry, and a little more than a year after he agreed to join Andrews Kurth in 2005, the firm paid $18.5 million to settle all malpractice claims against the firm by Enron’s bankrupt estate. (Andrews Kurth was one of Enron’s go-to firms for outside legal work.)
Barasch isn’t the only Am Law 100 partner with Stanford ties currently on the move. The Daily Business Review, a sibling publication, reported Tuesday that DLA Piper corporate partner Carlos Loumiet in Miami had joined Florida’s Broad and Cassel as a partner in the same city. Loumiet, who joined DLA in April 2011, also once worked at Greenberg Traurig and Hunton & Williams, where he handled Stanford-related work as cochair of the international banking groups at both firms. (The two firms have been sued by a court-appointed receiver representing Stanford victims.)
Barasch also isn’t the only Am Law 100 partner to recently be accused of breaching conflict of interest rules when transitioning from public service to the private sector. Last week former Utah Attorney General Mark Shurtleff was charged in a massive public corruption scheme, according to a report by sibling publication The National Law Journal.
The charges, filed by state prosecutors in Salt Lake City, accused Shurtleff of negotiating a settlement with Bank of America in a foreclosure case at the same time he interviewed for a job at Troutman Sanders, which handles legal work for the Charlotte-based financial services giant. Troutman eventually hired Shurtleff as a partner, although he abruptly left the firm in May 2013. Troutman has denied any wrongdoing.