R. Allen Stanford investors, looking to recoup their losses, are targeting his former outside counsel

R. Allen Stanford emerged as a Bernie Madoff-lite in February when the Securities and Exchange Commission (SEC) accused him of running a $7 billion Ponzi scheme. Now some Stanford investors, looking to recoup their losses, are targeting his former outside counsel. An Aug. 27 class action lawsuit, filed in federal court in Dallas, accuses law firm Proskauer Rose and partner Thomas Sjoblom of aiding and abetting the alleged fraud.

In a statement, the firm called the lawsuit "legally flawed and factually erroneous."

It came a few days after the filing of former Stanford CFO James Davis' plea agreement with the Department of Justice (DOJ). The agreement, under which Davis pleaded guilty, outlined how Sjoblom ("Outside Attorney A") made false statements and had Stanford executives provide false testimony to the SEC.

Sjoblom was outside counsel to Stanford Investment Bank beginning in 2005. He resigned from representing it Feb. 14, disaffirming all prior statements he had made to the SEC. Days later, the SEC sued Stanford for running "a massive fraud based on false promises and fabricated historical return data" as chairman of the Stanford Financial Group. Stanford's companies sold high-yield CDs promising liquidity, returns much higher than other banks offered and heavy oversight--none of which turned out to be true, the SEC said.

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