A $65 million settlement obtained by KTK was approved last week by the Texas federal judge overseeing the ongoing Stanford litigation. The settlement comes after years of insurers refusing to pay under their policies of insurance for the losses resulting from R. Allen Stanford’s Ponzi scheme.
The Stanford litigation has been ongoing since 2009 when the U.S. Securities and Exchange Commission’s investigation revealed Stanford had been selling billions of fraudulent certificates of deposit (CDs) from an offshore bank located in Antigua known as Stanford International Bank Limited. Although Stanford represented to investors that the CD proceeds were invested only in low-risk, high-return funds, in reality they were funneled into speculative private equity investments and used to fund R. Allen Stanford’s extravagant lifestyle.
In 2012, Stanford was sentenced to 110 years in prison on 13 counts of mail fraud, wire fraud, conspiracy, and obstruction for defrauding approximately 30,000 investors. A Receivership was created to recover all assets of the Stanford entities.
Included in those assets were the proceeds of Stanford Bank’s insurance policies. The insurers had denied hundreds of insurance claims made by individuals, arguing that the insurance policies issued to the Stanford entities did not cover the claims brought by the individual investors or the Receiver.
In 2014, the Receiver hired KTK to pursue the insurance policies that insurers had refused to pay since 2009. After thousands of hours of analysis, depositions, and negotiations, KTK brokered a settlement that required the insurers to pay $65 million to the Receivership estate contingent upon entry of a court order that would bar all other Stanford-related claims against the insurers.
Overruling several objections to the settlement, the Court found the settlement and bar order “necessary to effectuate a fair, reasonable, equitable settlement that is in the best interests of the receivership estate.”
Regarding KTK’s work, the Court noted: “The Stanford receivership’s insurance-related issues and claims are extraordinarily complex and time-consuming and have involved a great deal of risk and capital investment by Kuckelman Torline [Kirkland].” “Given the complexity of the factual and legal issues presented in this case, the preparation, prosecution, and settlement of this case required significant skill and effort on the part of Kuckelman Torline [Kirkland],” the Court added.
KTK is pleased to have played an important role in this significant recovery for the Receivership and for the Stanford victims.