A three-judge panel of a federal appellate court has rejected a last-ditch effort by three banks to postpone an upcoming trial in which victims in the R. Allen Stanford Ponzi scheme are seeking billions of dollars in damages.
The U.S. Court of Appeals for the Fifth Circuit, in a per curium decision released Tuesday, ruled that the Feb. 27 trial against Toronto-Dominion Bank, HSBC Bank, Independent Bank (formerly Bank of Houston) and Societe Generale Private Banking (SG Suisse) will go forward as scheduled.
Lawyers for TD Bank asked the Fifth Circuit to stop the case filed 13 years ago from going to trial, claiming that the “district court’s orders at issue in this mandamus proceeding are rife with clear and indisputable errors.”
The lawsuit, brought by the federal court-appointed receiver, Ralph Janvey, and the Official Stanford Investors Committee, accuses the banks of aiding and abetting Houston financier Stanford and his investment firm in the massive fraud scheme and seeks an estimated $4 billion in damages.
The fourth bank, SG Suisse, was not a party to the Fifth Circuit proceedings, sparking speculation in the Houston legal community last week that it may be involved in settlement negotiations with the receiver.
“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,” the judges wrote. Judges Patrick Higginbotham, Cory Wilson and Kyle Duncan were on the panel.
“Here, no such need is evident,” the judges wrote. “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.”
“The four most powerful words from the lips of a United States district judge are simply, ‘Call your first witness,’ and the veteran presiding judge will so state in a few short days,” the Fifth Circuit stated in the three-page decision.
The original lawsuit was filed in November 2009, which was nine months after the U.S. Securities and Exchange Commission filed its complaint accusing Stanford, the Stanford Financial Group and other executives of defrauding investors out of $5 billion between 1999 and 2008.
Stanford was charged criminally, was found guilty of fraud and is serving a 110-year prison sentence.
Hundreds of civil lawsuits were filed by investors. Nearly all were consolidated into a multidistrict litigation before U.S. District Judge David Godbey in Dallas. All of those except one have been resolved. The case against the four banks is the final remaining dispute.
The federal court appointed Janvey, a Dallas lawyer, to help investors recover as much of their losses as possible. Baker Bott partner Kevin Sadler is the lead lawyer for the plaintiffs. The receiver was later joined by the Official Stanford Investors Committee, which is also represented by James Swanson and Lance McCardle of Fishman Haygood in New Orleans.
To date, the receiver and the committee have recovered $1.2 billion for the victims.
The receiver’s case has spent a dozen years in litigation, including multiple trips to the Fifth Circuit for various legal disputes.
Along the way, scores of defendants settled. The most recent was Mississippi-based Landmark Bank, one of five banks scheduled to stand trial on Feb. 27.
Lawyers on both sides say the trial will likely last six to eight weeks.
The case is In re: Toronto-Dominion Bank and the case number at the Fifth Circuit is 23-20033.