June 17, 2019 / 8:44 PM / 4 months ago

U.S. court voids $65 mln settlement tied to Allen Stanford Ponzi scheme

June 17 (Reuters) - A federal appeals court on Monday threw out a settlement requiring insurers to pay $65 million to a court-appointed receiver for companies once run by Allen Stanford, the Texas financier serving a 110-year prison term for running a large Ponzi scheme.

By a 3-0 vote, the 5th U.S. Circuit Court of Appeals said the judge who approved the accord lacked authority to void or release some claims against the insurers, including underwriters at Lloyd’s of London, and bar further legal challenges over their policies and Stanford’s companies.

“The district court and receiver lacked authority to dispossess claimants of their legal rights to share in receivership assets for the sake of the greater good,” Circuit Judge Edith Jones wrote for the New Orleans-based appeals court.

A lawyer for receiver Ralph Janvey did not immediately respond to requests for comment.

The settlement had drawn objections from former Stanford managers and employees seeking to obtain insurance coverage and press their own claims, and from former Stanford investors who sued brokers covered by the insurance policies.

Monday’s decision returned the case to U.S. District Judge David Godbey in Dallas.

Once considered a billionaire but later declared indigent, Stanford, 69, was convicted of fraud by a Houston jury in 2012 over what prosecutors called a $7.2 billion Ponzi scheme that lasted two decades.

Prosecutors said Stanford sold fraudulent high-yielding certificates of deposit through his Antigua-based Stanford International Bank and used investor money to make risky investments and fund a lavish lifestyle.

The cases include Certain Underwriters at Lloyd’s of London et al v Haymon, 5th U.S. Circuit Court of Appeals, No. 17-10663. (Reporting by Jonathan Stempel in New York; Editing by Cynthia Osterman)

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