HOUSTON, July 1, 2024 – The Stanford Financial Group Receiver, Ralph S. Janvey, represented by Baker Botts L.L.P., has collected $1.305 billion in settlement payments since June 20, 2024 on behalf of investors of Stanford International Bank (“SIB”), a multi-billion dollar Ponzi scheme that defrauded tens of thousands of investors.

The Official Stanford Investors Committee (“OSIC”), an unincorporated association of investors in the now-defunct SIB,  was created to represent investors and to pursue litigation on their behalf.  OSIC, on behalf of itself and the Receiver, sued five banks that OSIC alleged assisted SIB in carrying out its fraudulent activities.  OSIC asserted claims for knowing participation in breach of fiduciary duty, aiding and abetting violations of the Texas Securities Act, and fraudulent transfer.  Baker Botts acted as lead trial and appellate counsel for OSIC in the lawsuit.

In January 2023, Baker Botts negotiated settlements with two of the banks – Trustmark and Societe Generale – for a total of $257 million.  In a last-ditch effort to avoid trial, the remaining bank defendants – Toronto Dominion, Independent Bank and HSBC – pursued two mandamus petitions at the Fifth Circuit, raising a variety of legal issues.  Baker Botts led the opposition briefing in the mandamus proceedings.   In an opinion issued on February 14, 2023, the Fifth Circuit rejected the requested mandamus relief.  The Fifth Circuit wrote:

“This case is, at minimum, complex, featuring myriad fact-specific issues litigated over the course of nearly a decade and a half through multiple courts. Halting the litigation’s momentum mere days before trial is set to begin would require indisputable clarity as to its necessity. Here, no such need is evident; assisted by able briefing and a review of the record, we are unpersuaded that either petition reaches the high demands of mandamus, or that the movant has satisfied the similar burden of staying the trial.”

Then, on the Friday before Monday jury selection, which was scheduled for February 27, 2023, Baker Botts negotiated settlements with these three remaining defendants for a total of $1.345 billion, bringing the total settlements to $1.602 billion, a historic litigation settlement in the history of Ponzi scheme recoveries.

Although all the settlements were approved by the District Court expeditiously, payment on the settlements had been delayed more than a year due to objections and appeals to all the settlements from convicted fraudster Allen Stanford, and the Antiguan Joint Liquidators, who objected to the Societe Generale settlement.

Stanford’s appeals, which he pursued all the way to the U.S. Supreme Court, were described by the District Court as “advanc[ing] only frivolous arguments and unfounded allegations.”   All of Stanford’s objections and appeals have now been resolved in favor of OSIC and the Receiver.

“It is disgraceful that Allen Stanford chose to stand in the way of compensation for the victims of his crimes, but the Receiver never wavered in continuing to fight for those same victims,” said Kevin Sadler, lead counsel for the Receiver.  “Stanford’s appeals and the ensuing lengthy delay they created are emblematic of the enormous challenges the Receiver has been required to overcome in the fifteen years since the Receivership began.”

The Receiver expects to receive an additional $40 million settlement payment by the end of July.  Distribution of the first $100 million settlement received earlier this year is well underway, and the Receiver expects to seek in the near future the district court’s approval of a billion-plus dollar distribution to victims from the other settlement payments received thus far.  Distribution of funds from the $157 million Societe Generale settlement must await the final resolution of the Antiguan Joint Liquidators’ appeal.

The Baker Botts team includes partners Kevin Sadler, Scott Powers, and Ariel House, special counsel David Arlington and Brendan Day, senior associates Maddy Dwertman and Mary Margaret Steinle and associate Leslie Roussev.

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