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5th Circuit Orders National Political Committees to Repay $1.7 Million in Stanford Contributions

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HOUSTON, Texas, October 24, 2012 -- The U.S. Court of Appeals for the Fifth Circuit affirmed a summary and final judgment in favor of the Stanford Financial Receiver, Ralph Janvey, that ordered five Democratic and Republican national political committees to repay more than $1.7 million in political contributions received from convicted Texas financier R. Allen Stanford.

The judgment in the case also requires the defendants to pay more than $400,000 in attorneys’ fees and costs, thereby resulting in a total award that may exceed $2.2 million. The defendants had challenged the Receiver’s standing to represent the interests of the creditors of the Stanford estate, had asserted that the Receiver’s claims were time-barred, and had also argued that federal election law preempted the Receiver’s state-law fraudulent transfer claims.

In a unanimous opinion authored by Judge James Dennis and joined by Judges Grady Jolly and Fortunato Benavides, the Court affirmed the long-standing principle that federal equity receivers are permitted to recover fraudulent transfers made by the individuals and entities over whom they are appointed.

“Today’s court ruling affirms the long-standing principle that federal equity receivers are permitted to recover fraudulent transfers made by the individuals and entities over whom they are appointed,” said Baker Botts Partner Scott Powers, a lawyer for the receiver. “The ruling also brings Stanford’s victims one step closer to recovering over $1.7 million in political donations that Allen Stanford and his co-conspirators made using other people’s money.”

The Court also rejected the defendants’ limitations and preemption arguments.

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