Friday, August 28, 2009
August 28, 2009, 5:42 PM ET Sjoblom, Proskauer Rose Face Fallout From Stanford Affair
Wow. Plaintiffs’ lawyers work fast!
On Thursday, as we wrote, the former No. 2 executive at Stanford Financial Group pleaded guilty to aiding a multibillion-dollar Ponzi scheme and appeared to implicate Stanford’s outside lawyer, Tom Sjoblom, in a scheme to obstruct a Securities and Exchange Commission investigation into the firm.
Well, lo-and-behold, on the same day, several victims of the fraud filed a class-action lawsuit against Sjoblom (pictured) and his law firm, Proskauer Rose.
The suit, filed in federal court in Dallas, says Sjoblom and Proskauer are liable for $7 billion in damages for aiding and abetting Stanford’s alleged fraud.
According to a story by the NLJ’s Leigh Jones, Proskauer said in a statement that the lawsuit was “legally flawed and factually erroneous.” (Click here for the complaint and scroll to page 19 for the relevant allegations.) Sjoblom’s lawyer, James Cole, declined to comment. Sjoblom hasn’t been criminally charged with any wrongdoing.
The civil suit is largely based on a plea agreement that we mentioned in this post yesterday, which focuses in part of the alleged actions of Sjoblom, who became outside counsel for Stanford’s international bank, based in Antigua in the Caribbean, starting in 2005.
One of the first examples of alleged wrongdoing by Sjoblom and Proskauer involves a 2006 fax sent to Sjoblom by Leroy King, an Antigua banking regulator, whom prosecutors say was being bribed by Stanford to rubber-stamp Stanford’s activities. (King was criminally charged by U.S. prosecutors and could be extradited to the U.S.)
In the fax, King allegedly asked for Sjoblom’s help in crafting a response to a different Caribbean banking regulator who was asking about the firm. The lawsuit states: “Recognizing that he had already been paid through cash bribe payments from Stanford, King concluded the August 1, 2006 facsimile transmission with the following handwritten words: ‘Please do not bill me (laugh), Thanks a million, Lee.”
Let us offer up an observation: Judging from the outcome of a recent and slightly analogous situation, the claims against Proskauer might be a long shot.
In a separate recent case in which a partner at a major law firm was charged and convicted of aiding his client’s fraud, the firm so far hasn’t had to pony up cash, despite the best efforts of members of the plaintiffs’ bar. A former partner at Mayer Brown, Joseph Collins, was convicted earlier this year of helping to cover up fraud at his client, Refco Inc., a commodities broker. A story yesterday by AmLaw Litigation Daily notes that Mayer Brown “succeeded in beating back nearly every attempt to hold it liable in civil suits for the damage caused by Refco’s collapse” in 2005. The commodities broker had hidden $430 million in bad debts from the company’s auditors and investors.