Greenberg Traurig office. Photo by J. Albert Diaz

Greenberg Traurig is asking a Dallas federal judge to dismiss an allegation that the law firm aided and abetted R. Allen Stanford in his massive Ponzi scheme, contending that the claim under which it was sued no longer exists in Texas.

The law firm was originally sued in a 2012 lawsuit before U.S. District Judge David Godbey by Ralph Janvey, a court-appointed receiver tasked with recovering $7 billion in funds swindled by Stanford, a former Houston financier found guilty of 13 fraud counts by a federal jury and sentenced to 110 years in prison.

The complaint in Janvey v. Greenberg Traurig alleges that the law firm helped Stanford shield his “offshore Ponzi bank” from regulatory scrutiny and deceived Stanford customers into believing his investment business was legitimate.

In 2014, Godbey dismissed some of the claims filed against Greenberg Traurig by the receiver but left intact a claim for “aiding, abetting, or participation in breaches of fiduciary duty.”

And in a motion before Godbey this week, Greenberg Traurig, a Miami-based firm with offices across the globe, including three in Texas, argues that the law on aiding and abetting in Texas has changed since he first ruled on their motion to dismiss.

The motion notes that in 2017, the Texas Supreme Court wrote in First United Pentecostal Church of Beaumont v. Parker that it never recognized a cause of action for aiding and abetting a breach of fiduciary duty or under the label “knowing participation.” The motion also noted that earlier this year, the U.S. Court of Appeals for the Fifth Circuit dismissed an aiding and abetting claim in In re DePuy Orthopaedics “because no such claim exists in Texas.”

“There can no longer be any confusion about whether the federal courts in this circuit can entertain an aiding and abetting claim,” according to the motion.

“The court need not be concerned that a dismissal of the aiding and abetting claim leaves the receiver without a remedy,” the motion continued. “The receiver's negligence claim—based on the same alleged Greenberg conduct seeking the same damages—remains in the case. The sole purpose of this motion is to streamline the ultimate submission of this case to the jury by removing a claim that no longer has any support in the law.”

Murray Fogler, a partner in Houston's Fogler, Brar, Ford, O'Neil & Gray who represents Greenberg Traurig, declined to comment on the motion.

Ed Snyder, a partner in San Antonio's Castillo Snyder who represents the receiver, said he will oppose Greenberg Traurig's motion to dismiss the aiding and abetting claim.

“It's been long-standing in Texas since 1942 that a cause of action for participation in breach of fiduciary duty has been recognized, and the Texas Supreme Court has never reversed its position on that,'' Snyder said.

Snyder said he has recovered in excess of $300 million in settlements with third-party litigants in the Stanford shareholder litigation, including a $63 million settlement earlier this year with Proskauer Rose.