U.S. Court Voids $65M Settlement Tied To Allen Stanford Ponzi Scheme

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.