Texas investors appeal recently dismissed $7.2 billion Stanford Ponzi case against Proskauer law firm

By Karen Kidd | Nov 10, 2017

NEW ORLEANS – Texas investors who for years have accused Proskauer Rose LLP of nurturing the $7.2 billion Robert Allen Stanford Ponzi scheme, appealed their case five days after it was dismissed by a federal judge who said the firm was entitled to attorney immunity.

Lead plaintiffs Sandra Dorrell and Philip Wilkinson filed their appeal Nov. 7 in the U.S. 5th Circuit Court of Appeals in New Orleans.

The appeal followed quickly on the heels of the case’s dismissal the previous Thursday, Nov. 2, in the Dallas Division of the Northern District of Texas, which rejected plaintiffs' arguments that attorney immunity should not apply in their case against Proskauer Rose.

"Because the litigation context, crime and TSA (Texas Securities Act) exceptions to attorney immunity do not exist at present under Texas state law and [former Proskauer Rose partner Thomas] Sjoblom’s alleged conduct was within the scope of client representation, Proskauer is entitled to attorney immunity," U.S. District Court Judge David C. Godbey said in his 15-page order.

Proskauer Rose's motion to dismiss was granted and the plaintiff's claims against the law firm were dismissed in full.

Stanford was convicted by a Texas jury in March 2012 of committing a $7 billion fraud.

Dorrell and Wilkinson, who like other investors purchased allegedly fraudulent certificates of deposit issued by Stanford International Bank, filed their present case against Proskauer Rose and Sjoblom on April 28, 2016, in Dallas Division of the Northern District of Texas, seeking class action status. The case was a continued attempt by plaintiffs to recover funds related to the alleged Stanford Ponzi scheme, in which Sjoblom was accused of helping Stanford evade regulators.

A previous attempt at a class action lawsuit, filed in August 2009, was dismissed March 10, 2016, by the 5th Circuit on an attorney immunity defense, which shields an attorney from liability if they are working on a client's behalf. The plaintiffs claim in their more recent case that the attorney immunity defense does not apply because Sjoblom didn't represent Stanford during litigation and that crimes were committed.

Proskauer Rose filed a motion with the district court claiming it was "wholly immune" under Texas' attorney immunity doctrine. Plaintiffs argued three exceptions to that doctrine, that Sjoblom had not represented Stanford in litigation, that crimes were committed and charges had been filed under the Texas Securities Act, applied in full or in part in this case.

"Because Texas law at present does not recognize any of these claimed exceptions, Proskauer is wholly immune from suit," the subsequent order for dismissal said.

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Dallas Division of the Northern District of Texas Proskauer Rose LLP U.S. Court of Appeals for the Fifth Circuit U.S. District Court for the Northern District of Texas

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