|Convicted financier Allen Stanford, who is serving 110 years in prison for his $7 billion Ponzi scheme, |
arrives at Federal Court in Houston for sentencing June 14, 2012.
Wednesday, February 26, 2014
Investors in Allen Stanford's $7 billion Ponzi scheme can sue to recoup losses from lawyers, insurance brokers and others who worked with the convicted swindler, the U.S. Supreme Court ruled on Wednesday.On a 7-2 vote, the court held that lawsuits filed in state courts can go forward. The majority said the ruling would not affect the U.S. Securities and Exchange Commission's (SEC) ability to enforce securities law as some had feared.
Stanford's fraud involved the sale of bogus certificates of deposit by his Antigua-based Stanford International Bank. He is serving a 110-year prison sentence.
New York-based law firms Chadbourne & Parke LLP and Proskauer Rose LLP and insurance brokerage Willis Group Holdings Plc were sued by former Stanford investors. The investors also sued financial services firm SEI Investments Co and insurance company Bowen, Miclette & Britt.
"It's clear the justices understood that ruling for the defendants would create an immunity that Congress never imagined," said Tom Goldstein, a lawyer representing the former Stanford clients.
Representatives from the two law firms said that when the case returns to the lower court the defendants would move to dismiss the suit on other grounds.
Writing for the majority, Justice Stephen Breyer said the Securities Litigation Uniform Standards Act (SLUSA) did not prevent the state lawsuits from proceeding. The law says that state lawsuits are barred when the alleged misrepresentations are "in connection with" the purchase or sale of a covered security, which is defined as a security listed on a national exchange at the time the alleged unlawful conduct occurred.
As the defendants in the case were not selling securities traded on U.S. exchanges, "it is difficult to see why the federal securities laws would be - or should be - concerned with shielding such entities from lawsuits," Breyer wrote.
IMPACT ON SEC
The Obama administration, representing the SEC, had sided with the defendants to try to protect the agency's authority to pursue wide-ranging investigations.
The administration said the "in connection with" language in SLUSA that limits state court lawsuits mirrors language in federal law that gives broad authority of the SEC to pursue such misrepresentations.
Justice Anthony Kennedy wrote in a dissenting opinion that the ruling would have a negative impact on the SEC because it "casts doubt on the applicability of federal securities law to cases of serious securities fraud." Kennedy was joined in dissent by Justice Samuel Alito.
Securities law experts backed the majority's view that the ruling was relatively narrow.
Donald Langevoort, a professor of law at Georgetown University, said he was "very surprised" the SEC tried to argue that a ruling in favor of the plaintiffs could diminish the government's enforcement powers.
"The opinion is imminently correct as a matter of common sense and legal policy," Langevoort said.
Charles Smith, of the law firm Skadden, Arps, Slate, Meagher & Flom LLP who represents clients before the SEC, said the agency would be comforted by the limited scope of the ruling.
"The decision is crafted in a way that is intended not to interfere with the SEC's enforcement authority," he said.
The SEC, via a spokesman, declined to comment.
The defendants had sought Supreme Court review after the New Orleans-based 5th U.S. Circuit Court of Appeals in March 2012 said the lawsuits brought under state laws by the former Stanford clients could go ahead.
The former Stanford clients are keen to pursue state law claims because the Supreme Court previously held that similar "aiding and abetting" claims cannot be made under federal law.
The class-action lawsuits filed by the former investors accused Thomas Sjoblom, a lawyer who worked at both law firms, of obstructing a SEC probe into Stanford, and sought to hold the other defendants responsible as well.
The cases are Chadbourne & Parke LLP v. Troice et al, U.S. Supreme Court. No. 12-79; Willis of Colorado Inc et al v. Troice et al, U.S. Supreme Court, No. 12-86; and Proskauer Rose LLP v. Troice et al, U.S. Supreme Court, No. 12-88.
(Reporting by Lawrence Hurley, additional reporting by Sarah N. Lynch; editing byHoward Goller, G Crosse and Amanda Kwan)
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Obama isn't the only politician who has declined to return Stanford campaign contributions to help make Stanford's defrauded investors whole. A total of 39 candidates and committees have kept their campaign funds despite the pleas by the receiver.
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Friday, February 14, 2014
|Mayor Bill De Blasio and Reverend Orlando Findlayter|
Mayor de Blasio calls a top cop after pal arrested — and then the friend is freed
Mayor de Blasio spokesman Phil Walzak confirmed that the mayor called a top police official early Tuesday morning to find out more about the arrest of Bishop Orlando Findlayter, a member of Mayor de Blasio’s transition team, who was wanted on two outstanding warrants.
By Tina Moore , Jennifer Fermino AND Bill Hutchinson / NEW YORK DAILY NEWS
Published: Tuesday, February 11, 2014, 6:27 PM
Updated: Wednesday, February 12, 2014, 11:20 AMA church pastor with outstanding warrants — and a position on Mayor de Blasio’s inaugural committee — dodged a night in the slammer after Hizzoner made a call to one of the city’s top cops.
Bishop Orlando Findlayter, 50, was released from custody early Tuesday after de Blasio inquired about his status.
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It was not clear how many other prisoners were released without seeing a judge that night, but people with warrants are usually held until the matter is cleared up in court.
Sgt. Ed Mullins, president of the Sergeants Benevolent Association, said the minister should have gone to jail.
RELATED: OBAMA URGES CONGRESS TO COMPLETE WORK ON IMMIGRATION BILL
|Bishop Orlando Findlayter is out of jail after his arrest Monday on outstanding warrants |
stemming from the clergyman's involvement in an immigration reform protest.
“We don’t let you go. You’re not supposed to let them go. It’s a court order from a judge,” he said. “We can’t circumvent that. This is not a common practice. But I get it. I realize you’re the mayor and you got all kinds of friends.”
Still, cops and de Blasio deny Findlayter got special treatment in this bizarre story that reads like “A Jail of Two Cities.”
|Pro-immigration reform activists Bishop Orlando Findlayter and Sister Susan Wilcox are led to a police |
van after being arrested in October during a protest outside the ICE Immigration Detention Center.
The mayor made the call after members of a local clergy council contacted him and the NYPD after Findlayter’s arrest.
RELATED: TIME TO PRESS GOP ON IMMIGRATION REFORM
|Bishop Orlando Findlayter (left) was arrested Monday for outstanding warrants related to his |
immigration reform protests in October.
|The church of Bishop Orlando Findlayler, who was arrested Monday after a traffic stop, leading to |
cops discovering two outstanding warrants.
By then, it was too late to take Findlayter to Brooklyn arraignment court before it closed at 1 a.m.
Following de Blasio’s call, Royster spoke with Deputy Inspector Kenneth Lehr, commander of the 67th Precinct. She said Lehr had also been contacted by local clergy. The inspector was already at the stationhouse preparing to give the pastor a desk appearance ticket when she spoke to him, she said. Royster said Lehr told her: “‘Why have a clergyman in the command in jail overnight?’” Lehr, who has worked with Findlayter on community issues, personally released him.
“Did the mayor in any way persuade or say anything to whether or not this person would be arrested or released? Not at all,” Royster said. She added “it’s not unusual” for her to get calls from city officials about individuals taken into custody.
Findlayter, who could not be reached for comment, appeared in court Tuesday and the warrants were vacated, officials said.
With Chelsia Rose Marcius and Kerry Burke