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Three are filed by individuals, and two are by Trustmark National Bank.
Titles of the filings are contained in a lengthy footnote in the court-appointed receiver’s opposition to a Louisiana couple’s request for arbitration with their former Stanford financial advisers.
The couple, Linda and Mark Oge, reportedly bought certificates of deposit issued by Stanford International Bank Ltd.
Stanford receiver Ralph Janvey of Dallas insists arbitration would “greatly disrupt” his efforts to identify and distribute Stanford assets to the victims of an alleged $7.2 billion Ponzi scheme through the CD sales.
Thousands of Mississippians are believed to be among the victims, although few names have become public except through individual lawsuits. The Daily Journal has made formal requests for that information to the receiver and the Mississippi Secretary of State’s Office, which registers securities brokers.
Arbitration or not?
At the heart of several of these lawsuits’ fates is whether a Dallas federal judge will allow them to go to arbitration. The judge also has stopped other lawsuits against Stanford-related defendants without court approval.
“If there is one arbitration and one subpoena,” Janvey said in his response, “there will be thousands.”
He asks the court to deny the Oges’ “quest to initiate a race to the courthouse.”
Among the newly revealed Mississippi lawsuits are:
- Guthrie T. Abbott, Patricia M. Abbott and Linda Munn v. John Mark Holliday, filed in chancery court in Lafayette County.
- Smith v. Lenoir, filed in U.S. District Court of Southern Mississippi.
- Jeffrey A. Varas v. Robert O. Lenior and John Does 1-10 filed in Circuit Court of Copiah County.
They accuse former Stanford advisers and others of deception and fraud in the sale of the CDs, now virtually worthless in the financial empire’s collapse after CEO Allen Stanford, four top executives and an Antiguan regulator were indicted by a Texas federal grand jury.
Janvey claims that during a two-year period, Stanford advisers received commissions ranging from $200,000 to $2.6 million, along with other incentive compensation, to promote the CD sales.
The Abbotts and Munn, Patricia Abbott’s sister, sued Holliday of Tupelo, claing to have lost $500,000 and $250,000 respectively to Stanford CDs.
Their attorney, Cliff Hodge of Jackson, declined to comment. Holliday has asked that the case go to arbitration, and both sides are waiting for a hearing.
Holliday was vice president and financial adviser in the firm’s Tupelo office.
Abbott is one of north Mississippi’s most prominent attorneys and is professor emeritus at the University of Mississippi law school.
Paul Stephenson at Watkins & Eager of Jackson, who represents former advisers Neal Clement of Tupelo and Robert O. Lenoir of McComb, did not respond to questions about the cases.
Two lawsuits are against Lenoir, who worked in Stanford’s Jackson office.
Emma Mae Smith of Canton sued him, claiming she lost $500,000 in the Stanford CD crash. Her lawsuit is on hold pending arbitration.
Details of the Varas lawsuit were not immediately available from his attorney, James Shannon of Hazlehurst.
Company and individual assets were seized by the receiver and, in most cases, still are frozen unless they’ve been sold to fund the receiver’s work or go into a victims’ fund. Few informed observers predict much will come of the fund.
The two bank lawsuits are Trustmark National Bank v. HP Financial Services of Venezuela, filed in U.S. District Court of Northern Texas, and Trustmark National Bank v. Cicso Systems Capital Corp., also filed in Northern Texas.
They are similar in that Trustmark seeks to avoid making good on nearly $3 million for two letters of credit it issued to be paid to Stanford companies.
One, issued in 2007, was presented by HP Venezuela for $1.98 million. The other, issued in 2008, was presented by Cisco Systems Capital Corp. of Nevada.
Trustmark insists a March 12 receiver’s order prevents it from paying off the letters of credit. The Hinds County-based bank also wants to keep the cash collateral until decisions are made.
Trustmark seeks the federal court’s agreement with its positions, as well as attorneys fees.
Both HP and Cisco provided Trustmark with a certificate of deposit as a condition to issue the letter of credit, the lawsuit claims.
“Trustmark is legally excused from performance under the Letter of Credit,” it says, given the federal court’s control over Stanford assets.
But Cisco, through De Lage Landen Financial Services Inc. (DLL) countersued Trustmark, claiming the funds paid from the letter of credit were independent Trustmark funds, not money from Stanford.
DLL says it, as Cisco’s assignee, and Stanford Financial Group signed a lease to assume debts of Caribbean Sun Airlines Inc. in March 2008.
Stanford ultimately defaulted and DLL has gone after the money behind the letter of credit.
In addition to the receiver’s orders, Trustmark cites technical issues as reasons it won’t honor the document.
Two other Mississippi lawsuits are known.
The Daily Journal previously reported on a federal lawsuit by the Paschal family of Louisville and Jackson, who say they lost $15.7 million on advice of their adviser, David Haggard of Georgia. Tupeloan Walt Walton has sued his former adviser, Clement, in Lee County Chancery Court to recover his life savings of $430,000.
In a legal answer to Walton’s lawsuit, Clement denies the accusations and insists the claims should go to arbitration.
Contact Patsy R. Brumfield at (662) 678-1596 or patsy.brumfield@djournal.com.