Ponzi Schemes Make For Strange Bedfellows

Lawsuits about Ponzi schemes seem to be all the rage now.  At the end of last year, mega-firm Holland & Knight formed a Madoff Advisory Group.  The head of the group stated that:

Holland & Knight is already assisting a number of companies, financial institutions, charitable foundations and individuals who have been impacted by the Madoff entities. We are providing important guidance in assessing claims against the Madoff entities, in positioning our clients to reduce the likelihood of third party claims against them, and in accessing and providing avenues for governmental relief for aggrieved parties.

And at the end of last week, Texas law firm Strasburger & Price was one of two law firms that filed a multi-billion dollar lawsuit against insurers stemming from R. Allen Stanford’s alleged Ponzi scheme.

The problem?  In May, Holland & Knight was sued for allegations that its conduct contributed to the Ponzi scheme of Florida investment advisor Arthur Nadel.  And Strasburger & Price was a defendant in a lawsuit alleging that the firm helped one of its clients defraud investors through an oil and gas Ponzi scheme.

I don’t know how the case against Strasburger turned out or how the case against Holland and Knight is going to turn out.  But I think it makes sense that if you’re hiring a firm to pursue a claim based on a Ponzi scheme that you ought to make sure the firm hasn’t been accused of participating in Ponzi schemes itself.