A federal appeals court has dashed the hopes of 900 investors from Louisiana and 36 other states who were defrauded by former Texas tycoon R. Allen Stanford's massive Ponzi scheme.

The retiree victims, including dozens from the Baton Rouge area, were hoping the 5th U.S. Circuit Court of Appeals in New Orleans would resuscitate their 12-year-old class-action lawsuit that a federal district judge in Baton Rouge dismissed in mid-2019.

But on Friday, a three-judge panel of the 5th Circuit affirmed U.S. District Judge Brian Jackson's ruling that dismissed the lone remaining defendant, Pennsylvania-based SEI Investments Co., in the federal lawsuit.

Baton Rouge lawyer Phil Preis, one of the investors' attorneys, said Monday he is "obviously disappointed" with the appellate court ruling given the 10-year fight to have the lawsuit certified as a class-action.

When asked if the ruling will be appealed to the U.S. Supreme Court, Preis said, "It's something we're going to look at."

Stanford Trust was based in Baton Rouge, and the Stanford Group — another Stanford entity — had offices in downtown Baton Rouge. Victims of the Ponzi scheme invested their retirement savings as rollover IRAs in fraudulent certificates of deposit (CDs) that Stanford Trust sold in Baton Rouge.

Financial advisers for Stanford told investors their money was safely held in CDs at Stanford International Bank in the Caribbean island of Antigua. The money for the CDs, however, funded the lavish lifestyle of Allen Stanford, who took more than $7 billion from victims worldwide.

Preis has said local victims, many of them retirees from Exxon and other plants along the Mississippi River, lost $250 million in the scheme.

Allen Stanford was convicted of fraud in 2012 and is serving a 110-year prison sentence for the Ponzi scheme.

The lawsuit alleged that SEI, an international financial services firm that administered the Stanford Group Co. investments, performed the accounting and reporting of the IRA investments and "actively and materially aided" Stanford Trust Co. and the Stanford Group to "perpetuate the massive Ponzi scheme."

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SEI denied those allegations.

In his 2019 ruling, Jackson stated that SEI's liability under the "control-person" provision of Louisiana Securities Law was the issue. He said SEI did not control Stanford Trust's primary violations.

The 5th Circuit panel agreed Friday. It said SEI's contract made Stanford Trust responsible for pricing the CDs, providing SEI with complete and accurate data, reviewing monthly statements, and distributing those statements to investors.

Circuit Judge Jerry Smith wrote for the panel that "STC could instruct SEI to do certain things, but that authority was not reciprocal."

"Moreover, SEI never had custody of the CDs, and it did not price CDs for any bank (let alone STC), sell or market them, or audit the data that it prepared for STC's accounts," he added. "SEI also lacked an ownership stake in STC and had no representative on its board: SEI could not direct STC's management or policies."

Preis said Monday the 5th Circuit disagreed with the investors' argument that SEI had the ability to stop the violation since it controlled the distribution of information on Stanford International Bank CDs to investors.

"In my world, the power to stop a violation when an entity like SEI controls the communication process with the investors, is the same as the power to control the violation," he said.

Email Joe Gyan Jr. at jgyan@theadvocate.com.