One of five banks facing a multibillion-dollar fraud trial next month in Houston for providing financial services to Ponzi scheme perpetrator R. Allen Stanford and his investment firm has agreed to settle its part of the case for $100 million.
Mississippi-based Trustmark Corporation, the parent of Trustmark National Bank, agreed late New Year’s Eve to pay the $100 million rather than face a federal jury alongside four other banks accused of “aiding, abetting and participating in the fraudulent scheme” perpetrated by Stanford and his associates.
“Trustmark makes no admission of liability or wrongdoing in connection with any Stanford matter,” Trustmark said in a document filed Dec. 31 with the U.S. Securities and Exchange Commission. “Trustmark expressly denies any liability or wrongdoing with respect to any matter alleged in regard of the multi-billion-dollar Ponzi scheme operated by Stanford for almost 20 years. Trustmark’s relationship with Stanford consisted of ordinary banking services provided to business deposit customers.”
The settlement is another victory for the court-appointed receiver, Dallas lawyer Ralph Janvey, who will have now recovered more than $1.2 billion for the 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.
The trial against the four remaining banks — Toronto-Dominion Bank (TD Bank), HSBC Bank, Independent Bank (formerly Bank of Houston) and Societe Generale Private Banking (SG Suisse) — is set for trial Feb. 27 in federal court in Houston and seeks $4 billion in actual damages.
Janvey and the official Stanford investors committee are “very pleased that they reached a settlement of this magnitude for the benefit of the victims of Allen Stanford’s fraud,” said Baker Botts partner Kevin Sadler, who represents both in the litigation.
Sadler said the receiver and investors committee “will prosecute vigorously their claims against the remaining defendants in the case.” He said the upcoming trial “presents an opportunity for these banks finally to be held publicly accountable for their conduct.”
“Over many years, these banks helped Stanford move billions of dollars that he obtained by fraud,” Sadler said.
In its statement to the SEC, Trustmark said the company “determined that it is in the best interest of Trustmark, Trustmark Corporation and the shareholders of Trustmark Corporation to enter into the settlement to eliminate the risk, ongoing expense, uncertainty as to ultimate outcome and imposition on management and the business of Trustmark of further litigation of the actions and related Stanford claims.”
In a notice sent to U.S. District Judge Kenneth Hoyt of Houston, Sadler and Houston trial lawyer Robin Gibbs, who represents Trustmark, said the $100 million settlement needs court approval to be final.
Stanford was convicted on fraud charges in 2012 and is serving a 110-year prison sentence.