After more than a dozen years of motions, objections, petitions and appeals, the multibillion-dollar civil fraud case against five banks that provided financial services to Ponzi scheme perpetrator R. Allen Stanford and his investment firm will finally go to trial later this year and the trial will take place in Houston.
A federal judge, who has overseen the massive litigation brought by thousands of investors who claim they were defrauded more than $5 billion in hard money by Stanford and the Stanford Financial Group between 1999 and 2008, said the biggest and final of all the lawsuits is ready to be sent back to Houston to be decided by a judge and jury in the town were the scheme took place.
U.S. District Judge David Godbey of Dallas, who was appointed in 2009 to handle all civil litigation stemming from the Stanford fraud, ruled Thursday that “the proper time to remand the case to the Southern District of Texas has arrived.”
Lawyers involved in the litigation said the case could go to trial as early as this summer or fall and would be the largest in terms of civil damages to go to trial since a Houston jury awarded more than $10 billion to Pennzoil in its tortious interference case against Texaco 37 years ago.
Judge Godbey, at the request of the U.S. Securities and Exchange Commission, which brought fraud charges against Stanford and his Stanford Financial Group in 2009, appointed Dallas lawyer Ralph Janvey to recover as much money as possible to return to the victims.
To date, the receiver has collected $1.1 billion.
The case against the five banks – Toronto-Dominion Bank (TD Bank), HSBC Bank, Independent Bank (formerly Bank of Houston), Trustmark National Bank and Societe Generale Private Banking (SG Suisse) – seeks $4 billion in actual damages and would be the largest of the lawsuits brought by the Stanford receiver.
The receiver, who is represented by Houston-based Baker Botts and partner Kevin Sadler, accuses the five banks of “aiding, abetting and participating in the fraudulent scheme” perpetrated by Stanford and his associates.
In his ruling Thursday, Judge Godbey rejected arguments by the banks that the receiver’s complaint and request for damages should be dismissed.
Stanford was convicted on fraud charges in 2012 and is serving a 110-year prison sentence.
Efforts to obtain comments from lawyers for the banks have been unsuccessful.