Robert Allen Stanford, Federal prison inmate and mastermind behind a Ponzi scheme which allegedly cost Southeast Louisiana investors several billion dollars as part of an overall estimated loss of $7 billion to all investors in the scheme. On July 23, 2024, sixteen (16) years after the scheme collapsed, the class action lawsuit of his victims against the Louisiana Office of Financial Institutions (OFI) commenced.
In today’s Sound Off Louisiana feature, founder Robert Burns provides an overview of the July 29, 2024 and July 30, 2024 proceedings of Lillie et. al. vs. Louisiana Office of Financial Insutions (OFI):
Highlights of July 29, 2024 and July 30, 2024 proceedings of Lillie et. al. vs. OFI.
Links for attorney arguing their clients case (so far):
Plaintiffs: Phil Preis and his daughter, Caroline Graham.
Defendant: Dennis Blunt, Nena Eddy, and Michael Victorian.
Initially, I felt sorry for these people; however, the more I learn about what happened, the less sorry I felt. The simple fact is these people decided to deposit their money in a foreign bank, which they knew absolutely nothing about and now they are suing because the bank failed. Residents of Louisiana should be familiar with what happens when banks fail. Even in the U.S. uninsured depositors risk losing their money if a bank fails and it doesn’t matter why the bank fails.
Why would someone bypass all the banks in Baton Rouge, in New Orleans, and in fact, the entire U.S to find a bank somewhere in the Caymans? They wanted more return than was being offered by all the banks in the U.S. and they were willing to take the risk to get it. Even a novice investor knows the relationship between risk and reward and these people were chasing rates that were apparently 200%-300% higher than banks in the U.S were offering.
The real tragedy is this knuckle head Judge is allowing this case to move forward. What precedence is he setting? If someone loses money when a bank fails, they should be able to sue OFI under the premise that OFI should have somehow prevented them from making a risky investment? OFI didn’t advise these folks where to deposit their money. The focus here seems to be on fraud, but it doesn’t matter why the bank failed, the fact is it failed, and their deposits were not insured. Full stop. They lost. Fraud is a component of many bank failures. As Burns has attested, he was a bank fraud investigator and I doubt he was investigating old ladies playing bingo.
In my view, this judge is playing a very dangerous game. This scenario fits many of the bank failures that have occurred in LA and across the U.S. Someone in the bank commits a fraud, the bank fails and people lose money. I suspect in every instance; the regulators knew these banks were going to fail before they failed. Instead of allowing this case to move forward, this judge should dismiss the case and thank OFI for stepping in and preventing other LA residents from losing money.
OFI cannot not be held liable for people making risky investment decisions.