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Two Louisiana firms accused of involvement in alleged Stanford Ponzi scheme

On Behalf of | Feb 25, 2012 | Firm News, White Collar Crimes |

A lawsuit was reportedly filed last week in federal court in Dallas against a Baton Rouge law firm and several New Orleans attorneys for allegedly playing a key role in helping prominent Texas financier Allen Stanford convince people to invest their retirement accounts in unsafe offshore investments.

Stanford is currently in prison awaiting trial on charges that his investment company operated a major Ponzi scheme and engaged in fraud involving $1.8 billion. Stanford’s companies collapsed in February 2009 and left as many as 30,000 customers financially damaged. The Baton Rouge law firm and New Orleans attorneys are accused of providing fake legal opinions and documentation to support the scheme.

The lawsuit alleges that the scheme took off after Stanford was permitted by the Louisiana Office of Financial Institutions (OFI) to purchase a Baton Rouge trust company in 1998 and change its name to Stanford Trust Co., despite concerns over the company’s financial activities, particularly its connection to Caribbean countries. The purchase was permitted to occur largely based on the support of an alleged fake letter of reference from a finance minister from the Caribbean country Antigua. That letter, according to prosecutors, was actually written by Stanford’s company.

Stanford consulted the Baton Rouge firm in 1999 in order to help the company negotiate with the OFI, which had begun to express concern about potential self-dealing and other conflicts of interest at the company. Attorneys working with the New Orleans firm were consulted by the company in 2001 for further assistance in this effort. An opinion letter dismissing the OFI’s legal concerns was reportedly instrumental in the decision to close examination of Stanford’s company.

The OFI determined in 2008 that Stanford’s company had been violating numerous securities laws, and the attorneys involved are accused of playing conflicting roles in the scheme between 1999 and 2009, though all defendants deny the charges.

Fraud charges can be difficult to prove, and prosecutors will do anything they can to establish the elements necessary to obtain a conviction. It is important for those charged with fraud to act quickly to ensure they have their rights secured.

Source: nola.com, “2 Louisiana firms accused in alleged Allen Stanford scheme,” Rebecca Mowbray, February 24, 2012.