A local attorney representing victims of the Stanford Group’s Ponzi scheme in a class action lawsuit has filed a motion for reconsideration after a federal judge in Baton Rouge quietly tossed the lawsuit in early July—dealing a blow to the Stanford victims.
Judge Brian Jackson, of the U.S. Middle District Court of Louisiana, dismissed the class action suit July 9 by granting the defendant, SEI Investments Company, summary judgment.
SEI is the Pennsylvania-based financial services provider that administered Stanford’s investments. The suit, involving roughly 900 mostly Baton Rouge-based victims of the Stanford Ponzi scheme, alleges SEI is liable for having misreported on clients’ monthly statements the value of their Stanford investments.
In the dismissal, Jackson states that what’s at issue in the long-running litigation is SEI’s liability under the “control-person” provision of Louisiana Securities Law. He writes the “undisputed facts” show SEI did not “control” Stanford Trust Company’s primary violations of the state’s securities law.
Attorney Phil Preis, who represents the claimants and has been involved in the Stanford litigation for nearly a decade, submitted a motion for rehearing on July 18, based on newly discovered evidence about the relationship between SEI and Stanford.
The class action lawsuit is one of more than a dozen still wending its way through the courts 10 years after federal investigators raided the offices of the Stanford Group, ultimately exposing a nearly $8 billion Ponzi scheme that sent the firm’s founder, R. Allen Stanford, to prison for life.
Not all of Stanford’s Louisiana investors—who, collectively, lost an estimated $1 billion when Stanford collapsed—are part of the class action. The claimants in the class number about 900 and are part of a group that invested their retirement savings as rollover IRAs into certain fraudulent CDs sold in Baton Rouge by Stanford Trust Co., one of the Stanford entities.
Together, those claimants lost about $250 million, though their lawsuit seeks damages that could bring the total amount due to nearly $500 million.
Earlier this year, a federal district judge in Texas transferred the case to the U.S. Middle District in Baton Rouge, where much of the fraud was perpetrated and where the victims still live.
Preis was traveling could not be reached for comment by this morning’s deadline.