Judge Approves Over $1B in Settlements with Banks in Stanford Ponzi Scheme Case

On August 8, 2023, U.S. District Judge David C. Godbey of the U.S. District Court for the Northern District of Texas (Dallas) entered orders approving court-appointed Receiver Ralph S. Janvey and the Official Stanford Investors Committee’s (OSIC) settlement agreements with Toronto Dominion Bank, Independent Bank (f/k/a bank of Houston), and HSBC Bank plc. Click here to read more on Law360.

Litigation in this matter began in 2009, when a group of investors filed a lawsuit alleging that five banks knowingly aided and abetted R. Allen Stanford and Stanford International Bank, Ltd. in perpetrating an $8 billion fraud, the second-largest Ponzi scheme on record. On the eve of trial in February 2023, Toronto Dominion Bank, Independent Bank, and HSBC Bank agreed to pay defrauded investors $1.205 billion, $100 million, and $40 million, respectively. Trustmark National Bank ($100 million) and Société Générale Private Banking (Suisse) S.A. ($157 million), the two other banks named in the suit, settled earlier in the year. Together, recoveries from the five banks amount to more than $1.6 billion. Read more here.

While the settlement approvals represent the final hurdles in this decades-long matter, funding of these settlements, and therefore distributions to fraud victims, are currently delayed by objections from R. Allen Stanford. Stanford has opposed all three of the most recent settlements, with several of the bank defendants arguing that the settlements do not become “final” until Stanford has exhausted all his litigation efforts. The District Court and the Fifth Circuit have ruled that Stanford’s objections are frivolous, and that Stanford has no right to appeal; in late July 2023, the Fifth Circuit dismissed his previous appeals of the approval orders in the related Trustmark and Suisse settlements.

For his part, the Receiver is taking legal action to terminate any effort to delay funding of the settlements. On August 11, 2023, Janvey filed a Motion to Enforce the Trustmark settlement in the Receivership Court. Despite Stanford’s litigation efforts, Janvey argued that the Trustmark settlement has become final under its terms. In addition, he filed a Motion to Expedite the briefing of the Motion to Enforce.

Fishman Haygood attorneys James R. “Jim” Swanson, Benjamin D. Reichard, Molly L. Wells, C. Hogan Paschal, and Lara K. Richards worked as part of a team concentrated on representing the plaintiffs in claims against Bank of Houston and Trustmark National Bank. Baker Botts and Castillo Snyder were co-counsel on the case.