A recent article in Law360, the LexisNexis media platform, provides a breakdown of Hunton & Williams LLP’s recent $34 million settlement over its involvement in Allen Stanford’s $7 billion Ponzi scheme. Thomas Ajamie analyzes the settlement.
As it has widely been reported, Stanford’s scheme involved the sale of billions of dollars in fraudulent certificates of deposit that was facilitated by a network of law firms, including Hunton & Williams. The settlement was related to one of multiple lawsuits that were filed in the wake of the 2009 collapse of Stanford International Bank and other Stanford-controlled entities.
In this case, the bank’s court-appointed receiver, Ralph Janvey, accused Hunton and former partner Carlos Loumiet, of facilitating the scheme in a number of ways including (1) structuring transactions for billions in fraudulent CDs, (2) manipulating government officials, and (3) shielding Stanford from regulatory scrutiny.
Mr. Janvey’s original complaint, filed in 2012, also alleged that Loumiet was deeply involved in the scheme not only in his role at Hunton & WIlliams, but also at Hunton’s co-defendant in the this case, Greenberg Traurig LLP, where Loumiet represent Stanford for years before joining Hunton and Williams. It is important to note, however, that Loumiet was not a party to the suit.
The proposed global settlement, pending approval by a Texas district court judge, is for any and all claims against the firm regarding any liability relative to numerous defunct Stanford entities.
The claims against Greenberg are not covered in this settlement, and the firm may have larger exposure since Loumiet was with that firm for a longer period of time
Additionally the settlement includes significant legal protections for Loumiet. First, there is a mutual covenant between Loumiet and the releasing parties not to bring additional claims against each other. Further, Loumiet has agreed to respond to discovery requests and depositions in the suit against Greenberg, and to be available to testify at hearings or at trial.
Tom Ajamie’s Analysis
In the Law360 article, Mr. Ajamie notes that the protections for Loumiet do not bode well for Greenberg:
“If the receiver has someone who knows everything that happened and everyone involved, that’s not good for Greenberg,” he said. “It appears like he’s going to assist the receiver in building a case against the firm, and they should be concerned.”
Tom represented Walston Houston Galleria Office LP in a Stanford-related conflict of interest case against Andrews Kurth LLP. While the outcome of the litigation against Greenberg is unclear at this time, the Hunton settlement is another significant step in resolving the Stanford affair. The settlement also dovetails with Ajamie LLP’s well-earned reputation for obtaining large recoveries for victims of financial fraud at trials and arbitrations.