Stanford victims’ attorney Preis blaming jury for trial’s outcome is downright despicable.

Phil Preis, attorney for the Stanford victims in their civil litigation against the Louisiana Office of Financial Institutions (OFI), vents frustration against the jury which declined to find OFI civilly liable by a vote of 11-1 (photo courtesy of WBRZ, Channel 2 in Baton Rouge).

In our previous feature, we indicated that it would be the, “10th and final episode of the Stanford / OFI matter;” however, as stated in today’s Sound Off Louisiana feature, that statement was predicated on the fact that Stanford victims’ attorney, Phil Preis, would “behave himself.”  Let’s take a look at today’s Sound Off Louisiana feature, in which founder Robert Burns dissects some of the statements made on this one-on-one interview Preis granted to WBRZ (Channel 2 in Baton Rouge):

 Burns breaks down segments of Preis’ interview with WBRZ in the aftermath of the Stanford / OFI verdict.

As Burns referenced, Preis also engaged in this Advocate feature entailing the Stanford / OFI verdict.  From that feature:

“The jury system did not break down,” Louisiana Attorney General Liz Murrill said in a statement Tuesday morning. “I’m grateful for the jurors hard work and service in this difficult matter. Stanford was a criminal con-man who bilked investors for his personal gain. And for that he is serving 100 years in prison.”

Preis said he plans to motion District Judge Don Johnson, who presided over the case, for a new trial this week. He’ll also ask Johnson to make an independent judgement on the case notwithstanding the jury’s verdict.

“We will all forever be bound by this horrific crime no one else will ever comprehend. I can’t thank you enough for your support through the years,” Angela Shaw Alexander wrote in a group email shared with her fellow victims Friday night. “We’ve certainly experienced our share of injustices and judgement from the public. I have – and always will – carry your experiences with me. They’ve changed me in ways I can’t explain and without a doubt changed the trajectory of my life in several ways.”

As mentioned in the video, we very much desired to obtain comment from Louisiana State Sen. Rick Edmonds’ office on the outcome of the trial.  Here is the voice message left by Burns in seeking to obtain comment from Edmonds (along with an email sent just before the phone call):

Voice message left with the office of State Sen. Rick Edmonds on Monday, August 12, 2024 at approximately 10:46 a.m., immediately after sending this email seeking comment from Edmonds.

Entailing the quote by Angela Shaw Alexander in the above Advocate article, as Burns mentioned, the next feature on the Stanford / OFI matter will be a deep dive entailing Alexander.

As Burns indicated in the video above, however, this feature provides a perfect opportunity to provide an in-depth look at what transpired in the matter of then-Angela Kogutt (her husband, Michael, filed for divorce in 2018, with the divorce being finalized in early 2019) and the family’s allegations that they relied upon the guidance of a law firm in opting to invest approximately $4.264 million in the Stanford International Bank CDs.

In short, Alexander’s former in-laws ran a successful small business which they ultimately sold to a German company in late 2007.  They relied upon the same law firm which closed that sale to provide names of some investment professionals for investing the proceeds.  After investing (in stages in calendar year 2008) some $4.264 million and subsequent to the Ponzi scheme collapse on or around February 17, 2009, the Kogutts sued that law firm on August 25, 2009 for alleged failure to exercise standards of care, etc.

On December 8, 2010, the law firm filed this Motion for Summary Judgment (along with this Supplement to the Motion for Summary Judgment which was filed on December 28, 2010).  Shortly thereafter, on January 28, 2011, the parties filed this Motion to Dismiss with Prejudice, with each party to bear their own costs.

A few highlights from the Kogutt lawsuit against the law firm:

This suit is brought by clients of a law firm for losses caused by the breach of the law firm’s duties to adequately investigate and protect the clients in connection with their investment in a financial entity known as Stanford International Bank, Ltd. (“SIB”). SIB was an offshore bank, located on the tiny Caribbean island of Antigua, owned and controlled by R. Allen Stanford, who is reputed to be the master-mind of an eight billion dollar “Ponzi scheme” involving the sale of SIB Certificates of Deposit (“SIB CD”).

On November 12, 2007, the transaction was closed.

Adkinson placed herself in a situation where she was not able to consider, recommend, or carry out an appropriate course of conduct even when faced with negative information which might weigh against Plaintiffs’ investments in SIB or Stanford’s affiliated companies. Rather than disclosing negative information, or undertaking a proper and thorough investigation, Adkinson recommended that the Plaintiffs invest millions of dollars with Stanford after only a cursory investigation because of her brother’s status as a financial advisor at SGC. Moreover, at no time did Adkinson ever disclose to Plaintiffs that her brother stood to receive commissions on the Plaintiffs’ investment, ranging from $45,000 to $90,000.

After the two meetings with the SGC advisors, the Kogutt family still had serious reservations about investing their life savings in an offshore bank. In order to insulate themselves against the “sales pitch” made by the SGC advisors, the Kogutt family requested that Adkinson and the MLJ&S law firm conduct a thorough due diligence analysis of the investments proposed by the SGC advisors. The Kogutt family advised Adkinson and MLJ&S law firm that they were “extremely risk adverse investors” and needed a safe, liquid and low-risk investment because the proceeds from the sale of the family business represented their entire life’s work.

The report makes no reference to any negative information that was widely available if a reasonable investigation had been conducted by Adkinson and the MLJ&S law firm including, but not limited to:

1. 1. As early as 1999, the U.S. Treasury Department issued an advisory warning U.S. banks to scrutinize transactions involving Antigua due to corrupt regulation of offshore banks. While the advisories were later lifted, the strict Antiguan bank secrecy laws remained in place, and were routinely used by SIB to thwart any U.S. investigative inquiries;

 

1. In 1999, SIB surrendered over $3 million dollars to the U.S. Government when the Drug Enforcement Administration discovered that the Juárez drug cartel was laundering money through its accounts at SIB.

1. SIB was created on the island of Antigua in 1991 from the vestiges of Guardian Bank which was under widely publicized suspicion in Montserrat for international money laundering activities;

 

1. In 1984, Allen Stanford filed for personal bankruptcy with approximately $13.6 million dollars in debt and had a previous bankruptcy over a failed business;
2. SIB, an offshore bank reputed to have six (6) billion dollars in CD deposits, was audited by a small “one man shop,” with a very strong 25 year personal relationship with Allen Stanford and his companies;

 

1. The SIB Board of Directors consisted of Stanford Financial Group insiders and close friends and family of Allen Stanford, including his elderly father and an 85-year-old cattle rancher and used car dealer from Stanford’s hometown, Mexia, Texas;
2. Financial advisors at SGC selling the SIB CD’s were pressured to sell the product, and were rewarded exorbitantly through substantial bonus payments, trips, cars and other benefits. All through 2007 and 2008, while Plaintiffs were investing, SGC advisors, including William R. Leighton (Adkinson’ brother), were engaged in a “contest” to funnel their clients into SIB CD’s. The lure of easy money was so strong that some SGC advisors referred to the remuneration as “bank crack.”

 

1. In the fall of 2005, SEC sent inquiries to U.S. investors concerning the sale of SIB CD’s. The inquiries suggested a fraud investigation;
2. U. S. regulatory agency, Financial Industry Regulatory Authority (“FINRA”) cited and fined SGC in April 2007 for failing to maintain sufficient net capital to function properly as a securities brokerage firm;

 

SGC had at least seven arbitration claims filed against it between 2001 and 2007. Contrary to Adkinson’ characterization in her report, the claims asserted included allegations of fraudulent misrepresentation, and even accused Stanford of running a Ponzi scheme;

In 2006, a lawsuit was filed against the Stanford companies alleging fraudulent and misleading claims to garner new money from investors, falsifying its financial disclosures, and operating a Ponzi scheme which attracted clients with “artificially high yield on Certificates of Deposit;”

 

1. In 2007, SIB was sued in Miami federal court in connection with an alleged customer dispute over the release of funds to U.S. authorities. SIB responded to the suit by alleging it was immune from suit in the U.S., and the U.S. courts lacked jurisdiction over it due to its foreign status in the sovereign nation of Antigua;
   1. As indicated in SGC annual audits filed with the regulators, SGC was a mere conduit for SIB, and the major source of revenue for SGC’s operations came from the commissions paid for selling the SIB CD’s.

Now let’s take a few minutes to examine the highlights of the law firm’s Motion for Summary Judgment:

Following this second Stanford meeting, Judy and Jeff Kogutt sent Leighton two emails containing a list of questions.  Leighton responded to Judy and Jeff on December 27^th at 3:21 p.m.  All of the Kogutt family members, including Niloufer Mistry, were copied on the email.  Cruickshank was also copied on the email.  Notably, neither Ms. Adkinson nor any other member of Malouf, Lynch was copied on the email. The email contains the following questions/responses, in relevant part:

Q:  When we buy a CD, what guarantee do we have that we get the money back if something happens to the Stanford Group or Stanford Bank? We want to be sure we don’t just get a piece of paper saying we own a CD and that will be all we are left with. If insurance backs it how do we make a claim and get the money?

A:  The CD is reflected on account statements (with on-line access) similar to what you would receive with a domestic bank or brokerage company. The insurance that is maintained by the bank protects depositors against fraud and embezzlement, etc. by bank management. In addition, the money managers that invest the bank’s money are covered by SfPC insurance and CAPCO, which protects all of the bank’s investments from the insolvency of the money managers.  I do not have copies of the claim forms but I can try to obtain them from the bank’s insurance brokers after the holidays.

 

Q:  During the meeting you said that Lloyds of London is the insurer on the international CDs. In the disclosure statement it doesn’t list them as insurers. It also says: “This insurance does not insure customer deposits and is not the equivalent of the FDIC insurance on deposits at many institutions in the U.S.” Does this mean principal and interest in the CD is not covered by insurance?

 

A:  No specific insurers are listed as the bank may choose to use different carriers over time. As we stated during the presentation and as described in [the answer above], the insurance is not FDIC insurance. First, FDIC insurance only applies to        $I 00,000 of deposits per social security number. The insurance at the Stanford International Bank insures against fraud and insolvency for the bank management and the money managers hired by the bank.

On the same day that the Kogutt family members received Leighton’s responses, approximately 35 minutes later, Ms. Adkinson provided a one-page email to the Kogutts.  The December 27, 2007 email details her review of the disclosure statement and other documents, along with the results of her Westlaw research of SGC and SIB. In this email, Ms. Adkinson also states:

I am not an investment advisor and I am not authorized to make statements on behalf of Stanford. What I have said here is from what I have read and researched.

After receiving Ms. Adkinson’s email, Irene Kogutt, the matriarch of the Kogutt family, concluded that Defendants’ “investigation” of SGC was inadequate. According to Irene Kogutt, the rest of the Kogutt family was aware of and discussed Defendants’ alleged sub-par due diligence analysis prior to investing with SGC. Despite their dissatisfaction with Defendants’ allegedly incomplete analysis, Plaintiffs proceeded with their investment with SGC in January 2008, without asking Defendants for any clarification or further investigation of SIB or SGC. Over the course of the next year, Plaintiffs continued to invest heavily with SGC in SIB CDs, but failed to ever inform Ms. Adkinson of the amounts of these investments, the strategy behind them, or the status of their investments. Rather, these numerous investment discussions and decisions took place between and amongst Plaintiffs and their SGC financial advisors.

As we read this section entailing Irene Kogutt and her misgivings about proceeding forward with any investment in the SIB CDs, we couldn’t help but be reminded of Ms. Allen (the former OFI trust examiner who testified via videotaped deposition at the trial) and her admonition to the Stanford investors that:  “Maybe they should have listened to the advice of our grandmothers and not put all their eggs in one basket, especially a company in a foreign country.”

At least in this instance, it would appear the “grandmother” in Ms. Allen’s testimony (i.e. Irene Kogutt) actually gave just such advice, but unfortunately for the Kogutt family, her uneasiness with the Stanford SIB CDs didn’t wind up being the final word and she and her concerns were apparently over-ruled.

As Burns stated near the end of the video, the next segment will entail a deep dive into Angela Shaw Alexander, and we feel certain you will not want to miss that feature!