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Stanford Receiver to Appeal to Fifth Circuit Over $88M Clawback

December 22, 2017, New York – Last month, a Texas federal judge denied a request by the court-appointed receiver of Stanford International Bank to overturn a jury decision keeping $88 million in cash in the hands of a cable and truck-racing magnate, who received it shortly before Stanford’s Ponzi scheme collapsed. Honorable Judge David C. Godbey denied the Receiver’s motions for judgment as a matter of law and motion for entry of judgment.

The honorable judge said that he had already ruled that the “Magness Defendants” did not have actual knowledge or inquiry notice of R. Allen Stanford’s Ponzi scheme, and further investigation of the Magness Defendants’ suspicions would have been futile. The judge further rejected receiver Ralph Janvey’s arguments that he committed multiple legal errors over by giving prejudicial instructions to the jury, erroneously admitted evidence from defense witnesses concerning Gary Magness’ state of mind, and erroneously granted summary judgment on the issue of unjust enrichment.

Previously, the court-appointed receiver handling the Ponzi scheme of Stanford International Bank urged the court last month to reverse the jury’s verdict, holding that there was no justification for questioning the jury’s finding that Janvey cannot clawback the money from Magness Defendants. Before that, the Texas federal judge had refused to revive an $88 million clawback suit linked to the $7 billion Stanford Ponzi scheme. Janvey again filed a renewed motion for judgment, requesting the court judge to undo the jury verdict. ‘

In his renewed motion filed with the court on October 13, 2017, the receiver alleged that he is entitled to judgment as a matter of law on his fraudulent-transfer claim. The Receiver reasoned that the record reflects that the Magness Defendants made admissions in tax filings that conclusively establish they had actual notice of the fraudulent nature of the $88.2 million in transfers that they received from Stanford International Bank. Thus, the Magness Defendants should be estopped from contesting the notice of the fraudulent nature of the transfers because the evidence conclusively establishes their lack of good faith.

However, after this, on December 22, 2017, Plaintiff Ralph S. Janvey, in his capacity as the Court-appointed receiver for the Stanford International Bank, Ltd., et al. has filed a notice of appeal against the Court’s Order, signed on December 13, 2017, and entered on December 14, 2017. The order denied the Receiver’s renewed Motion for Entry of Judgment as a matter of law and motion for new trial; and the Court’s amended final judgment signed on December 13, 2017, and entered on December 14, 2017. The Plaintiff has appealed to the United States Court of Appeals for the Fifth Circuit

Janvey is represented by Brendan Day, Scott Powers and Kevin Sadler of Baker Botts LLP and Ben Krage of Krage & Janvey LLP. The Magness Defendants are represented by Mark J. Barrera and M. David Bryant Jr. of Dykema Cox Smith, and Rachel Mentz and Andrew Petrie of Ballard Spahr LLP. The case is Janvey v. GMAG LLC et al., case number 3:15-cv-00401, in the U.S. District Court for the Northern District of Texas.