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Law office agrees to pay $65 million in allegations over Ponzi scheme

On Behalf of | Oct 31, 2019 | FINRA, Firm News, Ponzi |

Law office agrees to pay $65 million in allegations over Ponzi scheme

Greenberg Traurig LLP has agreed to pay $65 million to settle accusations of its involvement in a $7 billion Ponzi scheme, according to a report.

Law360.com reports Greenberg Traurig is linked to a Ponzi scheme ran by R. Allen Stanford, who was sentenced in June 2012 to 110 years in prison after being convicted of operating the multi-billion dollar financial scam that affected about 30,000 investors. Ralph Janvey, who received Standford’s estate, told Law360.com that the Ponzi scheme was the “second largest securities fraud scheme in U.S. history.”

Janvey proposed Greenberg Traurig pay a $65 million settlement that would be distributed to customers affected by the scammer’s Stanford International Bank Ltd. (SIB), according to Law360.com. Though Greenberg Traurig is paying the $65 million, a spokesperson for the firm told the news site “We believe we had no liability on the claims.”

According to federal court documents filed in north Texas on July 22, SIB “trained its brokers to assure potential investors that the Bank’s investments were highly liquid and achieved consistent double-digit annual returns, all under the protection of extensive insurance coverage.” In more than 20 years, SIB issued more than $7 billion in certificates of deposit.

However, authorities allege “brokers procured policies that provided no meaningful coverage of deposits in the Bank. When the Ponzi scheme collapsed, $7 billion in deposits were protected by $50 million in insurance coverage. Presenting as a legitimate enterprise, it was nothing but a single, massive fraudulent scheme.”

In a suit filed by investors led by Janvey, Greenberg Traurig, along with Hunton & William LLP, is accused of allowing the Ponzi scheme to operate due to their “skilled and complicit” lawyers. Hunton & Williams settled in a $34 million deal that was approved in 2018, according to Law360.com.

Greenberg Traurig argued in July that the firm shouldn’t have to pay for damages in the Ponzi scheme because its lawyers were unaware of Stanford’s illegal activities. Law360.com reports. Greenberg Traurig argued its lawyers only advised Stanford and urged him to cooperate with regulators. “Stanford repeatedly and secretly violated and misused Greengberg’s legal advice,” the firm said in a motion.

Greenberg seems to want to put the matter to rest, hence agreeing to pay $65 million.

About the Spencer Law Firm 

The Spencer Law Firm’s attorneys litigate FINRA related proceedings such as FINRA arbitration and enforcement actions.  If you have any questions regarding FINRA or if you have a FINRA arbitration or enforcement action and need assistance, please feel free to call Bonnie Spencer at the Spencer Law Firm at (888)237-459 to see what we can do for you. You can also visit us at Spencer-Law.com or at our office at 4635 Southwest Freeway, Suite 900, Houston, Texas, 77027.