Prominent law firms in Baton Rouge and New Orleans and other individuals have agreed to pay a combined total of $4.9 million to end civil claims for $1.8 billion stolen from investors by former Houston promoter Robert Allen Stanford.
A lawsuit by a court-appointed receiver and an investors committee claimed the loss was caused by the wrongful conduct of the law firms, who provided services to Stanford’s companies, and other defendants.
The Baton Rouge firm of Breazeale, Sachse & Wilson agreed Wednesday to pay more than $1.7 million to settle claims, civil court records in Dallas show. The New Orleans firm of Adams and Reese agreed to pay $1 million.
Cordell Haymon, a former director of The Stanford Trust Co. in Baton Rouge, agreed to pay $2 million in return for dismissal of all such claims against him.
The estate of deceased former Stanford Trust director Thomas L. Frazer agreed to pay a settlement of $175,000.
All of those civil suit defendants said in court documents that they did not cause investor losses and that they agreed to the settlements only to avoid further expenses tied to litigation of the 4-year-old claims.
More than 20,000 investors throughout the world lost investments in Stanford companies.
An estimated 1,000 Stanford victims, combined, live in the Baton Rouge, Lafayette and Covington areas. Estimates of their losses range to $1 billion.
Stanford, 65, is serving a 110-year term in federal prison for his 2012 conviction on charges that he fraudulently coaxed between $5.5 billion and $7 billion from his investors. He has been in federal custody since June 2009, about four months after federal authorities shut down his companies, which included an office in Baton Rouge.
“Our firm, along with several other defendants, has agreed to settlement terms with the plaintiffs in the Stanford Trust litigation,” Scott Hensgens, managing partner at Breazeale, Sachse & Wilson, said Thursday.
“Our firm stands by its defenses and positions taken in the litigation that neither it nor (law firm partner) Claude Reynaud Jr. played any part in the circumstances leading to the Stanford collapse,” Hensgens said.
“The settlement agreement does not contain any admission of liability or wrongdoing,” Hensgens added. “However, after years of protracted litigation, we felt it was in the best interest of the firm to settle this matter.”
The settlement agreement would end all claims against Reynaud for his work as an attorney but would not dismiss allegations that he failed to protect investors while serving as a director at Stanford Trust.
“Claude did nothing wrong,” Hensgens said.
From Nashville, Tennessee, Gif Thornton, managing partner for Adams and Reese, said, “This matter remains before the court pending its action on the proposed settlement. We do not comment on pending litigation.”
Telephone and email requests for comment late Thursday from Haymon went unanswered.
Court records show the firms and individuals who agreed to the settlement expect it to end all possible claims against them from the Stanford debacle. Otherwise, the agreement can be voided.
While Ralph Janvey — the court-appointed receiver searching for assets on behalf of Stanford victims — recommended the settlement, its terms do not become final unless they are approved by U.S. District Judge David C. Godbey in Dallas. The judge had not filed his decision Thursday night.
Also recommending approval of the settlement agreement was the court-appointed Official Stanford Investors Committee.