5th Circuit says Stanford victims can sue in state court

The U.S. Fifth Circuit Court of Appeals says U.S. investors who lost money in the Stanford Group debacle can file suit in state court against entities they claim enabled what the court is calling the “Stanford Ponzi scheme.” The ruling is significant, local attorney Phil Preis says, because state law only requires that plaintiffs prove negligence, not outright fraud, on the part of those entities. Preis estimates U.S. investors lost about $1 billion in the scheme, and says the Fifth Circuit decision makes it more likely that those people will be made whole. Only about $300 million remains of R. Allen Stanford’s crumbled empire after expenses, Preis says. Preis filed the original class action suit in Baton Rouge’s 19th Judicial District against the Stanford Trust, trust administrator SEI, a major international firm, and the Louisiana Office of Financial Institutions. Defendants were able to move the suit to federal court, but the Fifth Circuit today remanded the suit back to Baton Rouge. Preis expects to meet with Judge R. Michael Caldwell during the next six weeks to set a new schedule for the suit. “All those big companies like SEI that supported Stanford,” Preis says, “we have a very viable claim against them. This [decision] is the biggest deal that has happened in the three years I’ve been working on the litigation.” You can check out the complete court ruling here. —David Jacobs