(Reuters) – Societe Generale SA SOGN.PA agreed to pay $157 million to settle a lawsuit accusing the French bank and several other banks of contributing to imprisoned Ponzi schemer Allen Stanford’s estimated $7.2 billion fraud.
The payout was disclosed yesterday in a filing in Houston federal court, and requires a judge’s approval.
Money would go to a court-appointed receiver who is repaying victims of Stanford’s fraud, which was uncovered in Feb. 2009, two months after the arrest of Bernard Madoff.
Societe Generale denied wrongdoing, and settled to avoid the burden, “very substantial expense” and risk of litigation, settlement papers show. About $42.5 million of the payout would cover legal fees and expenses.
Three other lenders – HSBC Holdings Plc HSBA.L, Toronto-Dominion Bank TD.TO and Independent Bank, formerly known as Bank of Houston – face a scheduled Feb. 27 trial in the Houston court over their own relationships with Stanford.
Once considered a billionaire but later deemed indigent, Stanford, 72, is serving a 110-year prison sentence following his 2012 conviction for defrauding about 18,000 former investors.
Prosecutors said Stanford sold fraudulent high-yielding certificates of deposit through his Antigua-based Stanford International Bank, and used investor money to make risky investments and fund a lavish lifestyle.
A committee representing investors who bought the CDs are accusing HSBC, TD and Independent Bank of knowingly aiding the fraud, and are seeking compensatory and punitive damages.
The banks have denied wrongdoing, saying they provided routine services to Stanford’s bank and did not know about his fraud.
Another bank, Mississippi-based Trustmark Corp TRMK.O, reached a $100 million settlement of similar claims.
