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Thursday, February 19, 2009

We Love Blabbing Attorneys, Even if From Fear of Prosecution

NY Attorney in Fraud Scandal Tells All
The New York Law Journal by Zach Lowe - February 19, 2009

There are a ton of legal angles to be explore amid the growing scandal swirling around R. Allen Stanford and the Stanford Group Co. — most notably, where exactly Stanford himself is at the moment. One issue in particular, though, is relevant for the lawyer community: that an attorney for the company, Thomas Sjoblom of Proskauer Rose, sniffed out the fraud, withdrew his representation, and told federal investigators he essentially took back everything he had told to them in recent weeks, according to Bloomberg. Sjoblom didn't return calls for comment, nor did Richard Razook of Hunton & Williams, another attorney reportedly representing Stanford.

In the meantime, Recorder affiliate the Am Law Daily contacted a number of legal ethics experts to discuss Sjoblom's decision to come clean about a client's alleged frauds — especially given the possibility that in doing so, he disclosed confidential client information to the government. Experts said Sjoblom did precisely the right thing — and, more importantly, that the federal Sarbanes-Oxley Act likely made his decision much easier than it otherwise might have been. The SOX Act contains a provision that explicitly states that any attorney before the Securities and Exchange Commission "may" reveal confidential client information to investigators if that attorney believes that doing so will prevent a violation of the law or help rectify losses investors have already suffered, says Bruce Green, a law professor and ethics expert at Fordham University. Before SOX, attorneys in Sjoblom's predicament faced a patchwork of confusing state laws and bar regulations through which they had to navigate, experts say.

The tangle of regulations dated back to the famous OPM case of the early 1980s, when lawyers at a now defunct firm kept quiet about OPM's use of bogus assets to obtain loans and were later found liable for their silence in several civil suits, says Stephen Gillers, a legal ethics expert at New York University School of Law. The SOX regulation gave securities lawyers clarification if their state bar associations or state laws did not, says Steven Lubet, a legal ethics expert at Northwestern University. Sarbanes-Oxley even created a term for withdrawing representation and handing over information to investigators, Gillers says: a "noisy withdrawal." "He did the right thing here," Gillers says of Sjoblom. Lubet says most "noisy withdrawals" never become public. But the SEC mentioned Sjoblom — though not by name — in its complaint against Stanford, something that likely reveals the importance of Sjoblom's cooperation.

In the coming days, there will be other angles connected to the unfolding Stanford scandal to delve into. John Coffee, a securities law expert at Columbia Law School, says it's too early too tell if any third parties who may have steered investors to Stanford might be liable for damages (a la the Madoff feeder funds). That's in part because Stanford's companies are not insolvent; if that remains true, investors will go after the alleged wrongdoer directly instead of targeting third parties, Coffee says. There's also the pending whistle-blower suit two ex-Stanford employees filed against Stanford last year, and the fact that the federal government fined Stanford in 2007 but never went any further. Finally, there's the fun and interesting copyright suit Stanford University filed against the financial group last year. A team from Curtis Mallet-Prevost Colt & Mosle is repping R. Allen Stanford in that case but not in the corporate investigation, court records show.


Anonymous said...

Handcuff 5 attorneys from every county in New York. Say 5 words: "financial crimes, misprison of felony." After they clean up their soiled pants, let's listen to them go on about how they use a law license as a license to steal.

Anonymous said...

Handcuff 5 attorneys from every county in New York. Say 5 words: "financial crimes, misprison of felony." After they clean up their soiled pants, let's listen to them go on about how they use a law license as a license to steal.

Anonymous said...

This scumbag lawyer is protecting his rear end. Has he deposited all legal fees he received and all other compensation in a trust account maintained by the government for compensation of victims? No. Has the government moved to freeze his assets for compensation? No. Do you have faith in the government lawyers?

Anonymous said...

Proskauer clients involved in madoff, proskauer lawyer involved in stanford, hmmmm judenrat

Anonymous said...

Proskauer representing victims in madoff that were their clients.

Anonymous said...

Crooked Law Firm sat on a wall.
Crooked Law Firm had a great fall.
All the king's horses and all the king's men
Couldn't put Proskauer Rose together again.

Anonymous said...

this is what i have to say to all the legal blogs and articles that are trying to paint Proskauer attorney as hero whistleblower.
hmmm, i hear that the civil case names lawyers, perhaps Proskauer. You lawyers are an ill breed to try and protect Porksour’s lawyer who appears in on the scam, probably gave opinion on most of this and as the feds came in he ran away while the ship sank on investors. No one but you disgraceful lawyers say he whistleblew, most say his running sent up a red flag and then squealed like a pig.
Lawyers are ruining the country, most of them are now criminals with law degrees or cowards to face the corruption that has disgraced the profession. I like how this blog (wall street journal law blog and Business Week) edits users comments, erasing 1st amendment rights, well then you dirty lawyers and your media friends helped removed habeas, you approved and used torture (bebe yoo and gonzales, etc, etc, etc...) you have raped the financial markets, you are the scum of the earth. Hope you edit this, we are watching.
For the real jiggy on Proskauer Rose see
Your time is coming soon and your time will be eternal ~ Your eternal friend
Eliot Bernstein
Bat Out of Hell

Anonymous said...

Another spineless lawyer. He starts talking AFTER it appears he might get into some trouble. No pass for this clown. Lock him up also, and throw all the keys away.

Anonymous said...

I got disbarred for alot less than these jokers. Disbar them all and put them inthe joint then they will become a Maytag for brother!

Charles H. Green said...

Who are these "legal experts" who claim that Sjoblom "Did exactly the right thing?"

I read the Memphis Daily News story about the deposition. Did the "experts" read the same article I did?

How can they explain why Sjoblom opened up the SEC deposition session by forcibly arguing on behalf of his client that the SEC had no geographic jurisdiction, and that the CDs in question could not be legally defined as "securities" in an SEC-relevant sense.

What "whistleblower" starts out a deposition by scraping up technical arguments on behalf of his client?

Shades of "it depends on what the meaning of 'is' is."

Either he was acting just like a Grade B movie mob lawyer, right up until the last minute, when he jumped ship; or he was incredibly incompetent, blind or stupid, to miss the massive fraud that his presumably well paying client had been up to.

Which is it? Venality or incompetence? Is there another explanation? Would someone point it out?

Isn't the whole point of Sarbanes, as these "experts" point out, to encourage lawyers to report examples of egregious and harmful behavior? So--what took him?

Until somebody points my blind eyes to another interpretation, I can only look at the facts I've seen and think, "whistleblower, my ass!"

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