[ by Howard Haykin ]

Receiver Claims Lawyer Carlos Loumiet Who Worked for Both Firms Aided the Ponzi Scheme.

Greenberg Traurig and Hunton & Williams were sued on Thursday by the court-appointed receiver for the Official Stanford Investors Committee, representing victims of the Stanford $7 billion Ponzi scheme.   The Administrator claims that Loumiet, who had worked for both, was instrumental in Stanford's crime - i.e., he he helped the now-convicted swindler perpetrate his fraud.

The lawsuit said Stanford relied on Loumiet, a Miami international banking lawyer who served as outside counsel to the Stanford Financial Group from 1988 to 2009.  For the first 13 of those years, Loumiet was a partner at Greenberg Traurig before moving to Hunton & Williams in 2001.

How Loumiet Facilitated Stanford's Fraud.  According to the complaint, Loumiet allegedly provided a range of services for Stanford including the following:

• set up a safe haven in Antigua.
• established U.S. offices that sold CDs (certificates of deposit) to Latin American investors.
• helped Stanford invest his illicit profits in Caribbean real estate, venture capital investments and an unsuccessful movie project.
• All told, "Loumiet counseled Stanford for over 20 years on how to evade U.S. laws and regulations while still operating primarily from U.S. soil."
• recommended fellow lawyer Yolanda Suarez, who went on to become General Counsel of Stanford Financial Group. 

Suarez, and not Loumiet, is named as a defendant in the suit.  A lawyer for Yolanda Suarez did not immediately respond to requests for comment.  Yet, Loumiet said in an emailed statement that he never helped any client commit any wrongdoing nor represented anyone he knew was engaged in illegal activity.  He further added:

"After years of investigations by the federal government and months of trials involving Allen Stanford and his co-defendants, I have not been implicated in any wrongdoing.

Both law firms also denied having any responsibility for Stanford's fraud.   Hunton & Williams called the suit "an overreach by Stanford Financial Group's understandably frustrated investors attempting to recoup their unfortunate losses."  Greenberg Traurig said its work for Stanford occurred prior to 2001 - 3 years before the sale of the CDs at the center of the suit.  "This is merely plaintiffs' newest attempt to pry open a deep pocket," Greenberg Traurig's lawyer Jim Cowles said in an emailed statement, noting 63 other individual lawsuits and 15 pending class action claims, including against other large law firms and accounting firms.

Other Legal and Financial Firms Named in Similar Suits.    Law firms Proskauer Rose and Chadbourne & Parke, as well as insurance broker Willis Group Holdings Ltd are currently on appeal before the U.S. Supreme Court.  They claim that class actions brought under state law are barred by federal securities law.  They also say investors should not be able to go after deep-pocketed 3rd parties only tangentially related to the fraud.

Nevertheless, the 5th U.S. Circuit Court of Appeals in New Orleans had allowed the cases to proceed in March.   A lawyer for the investors, Edward Snyder of Castillo Snyder, said in an email that Loumiet "worked hand in hand" with Stanford and others to design the basic architecture of the Ponzi scheme. Snyder also represents investors in the lawsuits against Proskauer and Chadbourne.

The latest suit alleges violations of the Texas Securities Act and seeks to recover billions in losses incurred by the entire investor class, as well as punitive damages to be determined at trial. 

Stanford was convicted in March 2012 of 13 charges, including fraud and conspiracy for selling certificates of deposit from his bank in Antigua to thousands of investors in the U.S. and Latin America.  He had already spent some of those proceeds on yachts, girlfriends, sponsorship of a cricket tournament and other accoutrements of a high-rolling life.  He received a sentence of 110 years in prison. 

The case is Janvey et al v. Greenberg Traurig et al, U.S. District Court, Northern District of Texas, No. 12-4641.

• For the investor class: Edward Snyder and Jesse Castillo of Castillo Snyder.
• For the Stanford Investors Committee: Edward Valdespino of Strasburger & Price; Peter Morgenstern of Butzel Long.
• For the receiver, Ralph Janvey: Nicholas Foley and Douglas Buncher of Neligan Foley.For Greenberg Traurig: Jim Cowles of Cowles & Thompson.For Loumiet and Hunton & Williams: April Otterberg and Jeffrey Colman of Jenner & Block.
• For Suarez: Not immediately available.

For further details, go to:   [Reuters, 11/16/12].