NEW YORK, March 6 (Reuters) - The conviction of Allen Stanford on Tuesday for orchestrating a $7 billion Ponzi scheme
could be bad news for two prominent law firms and an attorney
facing civil lawsuits arising out of the Texas financier's
crimes.
Attorney Thomas Sjoblom and New York-based law firms
Chadbourne & Parke and Proskauer Rose are defendants in several
class actions and other lawsuits brought by Stanford Financial
investors, who claim they lost hundreds of millions of dollars
as a result of the fraud. Filed mostly in Texas, they allege
that Sjoblom, who worked at Chadbourne & Parke from 2002 to 2006
and at Proskauer Rose from 2006 to 2009, helped Stanford cover
up the Ponzi scheme and evade authorities. Investors claim that
the firms failed to properly supervise Sjoblom and were
negligent in hiring him.
Sjoblom and the law firms also are defendants in a $1.8
billion lawsuit filed in January in Washington, D.C. federal
court by the receiver for Stanford Financial, who alleges claims
similar to those filed by the investors.
Legal experts said that Tuesday's jury verdict against
Stanford on 13 counts of fraud could bolster the class actions
and individual cases against the firms and Sjoblom.
"We now know there were bad actors and people suffered. The
only question left is who should pay for it," said Michael
Downey, a legal malpractice attorney with law firm Armstrong
Teasdale who is not involved in the Stanford matter. "The issue
will be 'should we make these poor innocent investors bear the
losses or the lawyers who helped make it all happen.'"
Daniel Richman, an evidence professor at Columbia Law
School, said the criminal conviction does not guarantee a win in
the civil actions. But the verdict could mean that information
favorable to the civil cases about the scheme will "shake out,"
he said.
"It may well reveal the nature of any co-conspirators," he
said.
Sjoblom did not respond to messages seeking comment. Prior
to private practice, he was an attorney with the U.S. Securities
and Exchange Commission's enforcement division. He is now a solo
practitioner in Washington.
Proskauer Rose, which has about 650 attorneys, did not
respond to a request for comment. Chadbourne & Parke, which has
about 440 lawyers, declined to comment.
'BETTER POSITION'
Stanford was accused of defrauding about 30,000 investors
for more than 20 years in 113 countries with high-interest
certificates of deposit at Stanford National Bank, based in
Antigua. He denied the allegations, but the jury on Tuesday
convicted him of fraud, conspiracy and obstructing an
investigation by the SEC. He was found not guilty on one count
of wire fraud. He could face up to nearly 20 years in prison.
Edward Valdespino, an attorney representing some of the
investors suing the law firms and Sjoblom, said that the
conviction likely will give him better access to employees at
the firm who were questioned by prosecutors in the criminal
case, but who were unable or unwilling to talk to him.
"It puts us in a better position," Valdespino said.
And Jesse Castillo, a lawyer representing about 350
plaintiffs in class actions against Sjoblom and the firms, said
the criminal conviction "reinforces" his cases.
"It's satisfying to our clients," he said.
(Reporting by Leigh Jones)
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