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US court overturns $ 65 million settlement related to Allen Stanford Ponzi scheme

(Reuters) – A federal court on Monday announced a settlement requiring insurers to pay $ 65 million to a court-appointed receiver for companies formerly headed by Allen Stanford, a Texas financier serving a 110-year sentence. years in jail for managing a massive Ponzi scheme.

PHOTO FILE: The convicted financier Allen Stanford, sentenced to 230 years imprisonment for his $ 7 billion Ponzi scheme, arrives at the Federal Court in Houston to sentence his sentence. June 14, 2012. REUTERS / Richard Carson / File Photo

By a 3-0 vote, the US 5th Federal Court of Appeal said that the judge who had approved the agreement did not have the power to rescind or release certain claims against insurers, including underwriters of Lloyd's of London, and prevent any legal challenge to their policies and those of Stanford. companies.

"The District Court and the Receiver did not have the power to deprive the plaintiffs of their legal rights to share the receiverships for the benefit of a common good," wrote circuit judge Edith Jones the court of appeal based in New Orleans.

Ralph Janvey, the escrow, said in a May 22nd letter to Republican Senator John Kennedy of Louisiana that he had recovered $ 573 million for Stanford's victims since his appointment in 2009 and that he had been authorized to pay 232 millions of dollars.

The insurance regulations had raised objections from former Stanford executives and employees who were seeking insurance coverage and to assert their own claims, as well as former Stanford investors who had sued brokers covered by insurance policies.

Monday's decision sent the case back to US Judge David Godbey in Dallas.

Kevin Sadler, Janvey's lawyer, said the receiver could appeal. "It is particularly unfortunate that the interests of former Stanford executives and financial advisers have increased to the detriment of the rights of Stanford victims," ​​said Sadler.

Formerly considered a billionaire but later indigent, Stanford, 69, was convicted of fraud by a Houston jury in 2012 for what prosecutors had called a $ 7.2 billion Ponzi scheme. 39, lasting two decades.

Prosecutors said Stanford had sold high-yielding fraudulent deposit certificates through its Antigua-based Stanford International Bank and had used investors' money to make risky investments and finance a style. of sumptuous life.

Business includes certain underwriters at Lloyd's of London and others c. Haymon, 5th Circuit Court of Appeal, No. 17-10663.

Report by Jonathan Stempel in New York; Edited by Cynthia Osterman and Peter Cooney

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