Zacarias v. Stanford Int'l Bank, Ltd., 17-11073 CONSOLIDATED WITH 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
| Decision Date | 19 December 2019 |
| Docket Number | No. 17-11073 CONSOLIDATED WITH 17-11114, 17-11122, 17-11127, 17-11128, 17-11129,17-11073 CONSOLIDATED WITH 17-11114, 17-11122, 17-11127, 17-11128, 17-11129 |
| Parties | Antonio Jubis ZACARIAS; Roberto Barbar Plaintiffs - Appellants v. STANFORD INTERNATIONAL BANK, LIMITED Defendant Barry L. Rupert; Carol Rupert; Michael Rishmague; Lionel Alessio; Dan Auli Panos, et al, Movants - Appellants v. Official Stanford Investors’ Committee; Manuel Canabal; Willis, Limited; Willis of Colorado, Incorporated, Interested Parties - Appellees Willis Group Holdings Limited; Willis North America, Incorporated; Amy S. Baranoucky; Bowen Miclette ; Britt, Incorporated; Ralph S. Janvey ; Samuel Troice, Appellees v. Edna Able, Interested Party - Appellant The Official Stanford Investors’ Committee; Samuel Troice, on their own behalf and on behalf of a class of all others similarly situated; Manuel Canabal, on their own behalf and on behalf of a class of all others similarly situated, Plaintiffs - Appellees v. Carlos Tisminesky; Roberto Barbar; Ana Lorena Nuila De Gadala-Maria, Plaintiffs - Appellants v. Willis of Colorado, Incorporated; Willis Limited; Willis Group Holdings Limited; Willis North America, Incorporated; Amy S. Baranoucky; Bowen, Miclette ; Britt, Incorporated, Defendants - Appellees v. Barry L. Rupert; Carol Rupert; Michael Rishmague; Lionel Alessio; Dan Auli Panos, Edna Able; et al, Appellants v. Ralph S. Janvey, in his Capacity as Court-Appointed Receiver for Stanford Receivership Estate, Appellee Edna Able; Robert C. Ahders; Rodrigo Rivera Alcayaga; David Arntsen; Carlie Arntsen; et al, Plaintiffs - Appellants v. Willis of Colorado, Incorporated; WGH Holdings, Ltd.; Willis Ltd., Defendants - Appellees Antonio Jubis Zacarias, Individual; Ana Virginia Gonzalez De Jubis, Individual; Gladis Jubis De Acuna, Individual; Eric Acuna Jubis, Individual; Tulio Capriles, Individual; Jorge Casaus Herrero, Individual; Martha Blanchet, Individual; Luis Zabala, Individual; Emma Lopez, Individual; Elba De La Torre, Individual, Plaintiffs - Appellants v. Willis Limited; Willis of Colorado, Incorporated, Defendants - Appellees Ana Lorena Nuila De Gadala-Maria, Individual; Jose Nuila, Individual; Jose Nuila Fuentes, Individual; Gladys Bonilla De Nuila, Individual; Gladys Elena Nuila De Ponce, Individual, et al, Plaintiffs - Appellants v. Willis Limited, a United Kingdom Company; Willis of Colorado, Incorporated, a Colorado Corporation Defendants - Appellees Carlos Tisminesky, Individual; Rachel Tisminesky, Individual; Felipe Bronstein, Individual; Ethel Tisminesky De Bronstein, Individual; Guy Gerby, Individual; Vicente Juaristi Suarez, Individual; Amparo Mateo Longarela, Individual; Salvador Gavilan, Individual; Larry Frank, Individual; Mercedes Bittan, Individual; Omaira Bermudez, Individual, Plaintiffs - Appellants v. Willis Limited; Willis of Colorado, Incorporated, Defendants - Appellees |
| Court | U.S. Court of Appeals — Fifth Circuit |
Randall Alan Pulman, Leslie Sara Hyman, Esq., Matthew John McGowan, Pulman, Cappuccio, Pullen, Benson & Jones, L.L.P., San Antonio, TX, for Appellants BARRY L. RUPERT, CAROL RUPERT, MICHAEL RISHMAGUE, LIONEL ALESSIO, DAN AULI PANOS.
Kevin M. Sadler, Baker Botts, L.L.P., Palo Alto, CA, Stephanie Frederique Cagniart, Attorney, Scott Daniel Powers, Baker Botts, L.L.P., Austin, TX, for Appellee RALPH S. JANVEY.
Peter Michael Jung, Clark Hill Strasburger, Dallas, TX, Judith R. Blakeway, Clark Hill Strasburger, San Antonio, TX, Edward C. Snyder, Castillo Snyder, P.C., San Antonio, TX, for Appellees SAMUEL TROICE, MANUEL CANABAL, OFFICIAL STANFORD INVESTORS COMMITTEE.
Christopher John King, Esq., Counsel, Homer Bonner Jacobs, Miami, FL, Curtis Bradley Miner, Esq., Maureen Elizabeth Lefebvre, Esq., Colson Hicks Eidson, Coral Gables, FL, for Plaintiff-Appellant ANTONIO JUBIS ZACARIAS.
Christopher John King, Esq., Counsel, Luis Eduardo Delgado, Homer Bonner Jacobs, Miami, FL, Curtis Bradley Miner, Esq., Maureen Elizabeth Lefebvre, Esq., Colson Hicks Eidson, Coral Gables, FL, for Plaintiff-Appellant ROBERTO BARBAR.
Jonathan D. Polkes, Weil, Gotshal & Manges, L.L.P., New York, NY, for Defendants-Appellees Appellees WILLIS OF COLORADO, INCORPORATED, WILLIS, LIMITED, WILLIS GROUP HOLDINGS LIMITED, WILLIS NORTH AMERICA, INCORPORATED.
Jessica Lynn Crutcher, Mayer Brown, L.L.P., Houston, TX, Mark D. Manela, Esq., Manela Law Firm, Houston, TX, for Appellee AMY S. BARANOUCKY.
Bradley Wayne Foster, Esq., Counsel, Hunton Andrews Kurth, L.L.P., Dallas, TX, for Appellee BOWEN, MICLETTE & BRITT, INCORPORATED.
William Shawn Staples, Stanley Law, P.C., Houston, TX, for Appellant EDNA ABLE.
Before HIGGINBOTHAM, GRAVES, and WILLETT, Circuit Judges.
Treating the Petition for Rehearing En Banc as a petition for panel rehearing, the petition is GRANTED. We withdraw the opinions of July 22, 2019,1 and substitute the following opinions:
I.
The Securities and Exchange Commission filed a complaint in the Northern District of Texas against Robert Allen Stanford, the Stanford International Bank, and other Stanford entities, alleging "a massive, ongoing fraud." Invoking the court’s long-held statutory authority, the Commission requested that the district court take custody of the troubled Stanford entities and delegate control to an appointed officer of the court. The court did so, appointing Ralph Janvey as receiver to "collect" and "marshal" assets owed to the Stanford entities, and to distribute these funds to their defrauded investors to honor commitments to the extent the receiver’s efforts recouped monies from the Ponzi-scheme players.
The receiver has pursued persons and entities allegedly complicit in Stanford’s Ponzi scheme. Through settlements with these third parties, the receiver retrieved investment losses, which it then distributed pro rata to investors through a court-supervised distribution process. Four years into this ongoing process, the receiver sued two insurance brokers, not upon contracts of insurance, but for participating in the Ponzi scheme. As with the receiver’s other suits, monies it recovered from this suit would be distributed by the receiver pro rata to investor claimants. After years of litigation, the two companies, negotiating for complete peace, agreed to settle conditioned on bar orders enjoining further Ponzi-scheme suits filed against them. The district court entered the bar orders and approved the settlements. Certain objectors bring this appeal challenging the district court’s jurisdiction and discretion to enter the bar orders. We affirm.
II.
The story is well known. Under the operation of Robert Allen Stanford, the Antigua-based Stanford International Bank issued certificates of deposit (SIB CDs) and marketed them throughout the United States and Latin America.2 Stanford’s financial advisors promoted SIB CDs by blurring the line between the Antiguan bank and Stanford’s United States-based financial advisors, creating the impression that SIB CDs were better protected than similar investments backed by the Federal Deposit Insurance Corporation. Stanford trained its brokers to assure potential investors that the Bank’s investments were highly liquid and achieved consistent double-digit annual returns, all under the protection of extensive insurance coverage.
Here, the receiver alleges that, to support their marketing activities, the Stanford entities purchased insurance policies with the assistance of their insurance brokers, Bowen, Miclette & Britt, Inc. (BMB) from the 1990s and Willis from 2004. In their marketing materials, Stanford entities then touted insurance policies covering the Bank presenting the Bank’s unique insurance coverage, describing a gauntlet of audits and risk analyses the Bank passed to satisfy its insurers, and perpetuating the impression that Bank deposits were fully insured. They were distributed widely and sent routinely to Stanford’s client base.
BMB and Willis also provided letters for Stanford financial advisors. These letters described the Stanford International Bank’s management as "first class business people" and claimed the brokers "placed" Lloyd’s of London insurance policies for the Bank. The letters and promotional materials did not disclose the policies’ true coverage. These were the joint product of Stanford and the insurance brokers. Stanford employees drafted the letters, which Willis and BMB then placed on their own letterhead. The connections between Stanford and the defendants ran deep: BMB’s letters were signed by a BMB "financial specialist" who was also a Stanford board member.3 Stanford brokers then sent these letters to current and prospective investors.
The letters were a key part of the successful marketing efforts that drove the Ponzi scheme, as insurance played a central role in the Bank’s overall attractiveness to investors. Prospective investors who viewed the letters, as well as the Bank’s client base more generally, were drawn to the combination of relatively high rates of return and purportedly comprehensive insurance coverage. Over two decades, the Bank issued more than $7 billion in SIB CDs to investors.
Maturing CDs were redeemed with the funds of new investors.4 Deposits were meanwhile commingled and allocated to illiquid investments, primarily in Antiguan real estate—a portfolio monitored not by a team of professional analysts, but by only two individuals, Robert Allen Stanford and James Davis, the Bank’s chief financial officer. BMB and Willis had performed insurance assessments on all aspects of Stanford’s businesses, such that they enjoyed full understanding of operations. As a result, the brokers knew that SIB CDs financed an illiquid real-estate fund and that the quality and risk of the underlying investments had not been disclosed to investors. Moreover, on the Bank’s behalf, the brokers had procured insurance policies that provided no meaningful coverage of deposits in the Bank. When the Ponzi scheme collapsed, $7 billion in deposits were protected by $50 million in insurance...
To continue reading
Request your trial
-
Taylor v. Trevino
... ... receivership established in connection with a U.S. Securities and Exchange Commission ("SEC") ... " Bank One, Tex., N.A. v. Prudential Ins. Co. of Am. , ... Vendomation NZ Ltd. , 582 Fed. Appx. 338, 344 (5th Cir. 2014) (per ... , 666 F.3d at 966 ; see also, e.g., Zacarias v. Stanford Int'l Bank, Ltd. , 945 F.3d 883, 896 ... ...
-
Dig. Media Sols. v. S. Univ. of Ohio
...have little in common with Dream Center's injury (its insolvency). The Receiver lastly relies on two out-of-circuit decisions. See Zacarias, 945 F.3d at 898; DeYoung, F.3d at 1181-82. Neither decision assists the Receiver. In DeYoung, a third-party administrator managed individual retiremen......
-
United States v. Solco I, LLC
... ... Snuffer, Jr. (Steven R. Paul, with him on the briefs) Nelson, Snuffer, Dahle & ... of the court," not the parties agent. Zacarias v. Stanford Int'l Bank, Ltd ., 945 F.3d 883, 896 ... We consolidated the appeals. On June 2, 2020, we affirmed the ... ...
- Taylor v. Trevino