TEXAS: Susan Stanford (Sir Allen Stanford's wife) sues her former divorce attorney

The ponzi scheme meets the divorcee
The American Bar Association Journal did a report today about the estranged wife of alleged ponzi schemer Allen Stanford – Susan Stanford – and how she has sued her former divorce attorney for $200 million….Boy that was a long sentence. Lot’s of syntax errors I am sure? Oh well.
In any event, Mrs. Susan Stanford is reportedly going after her former attorney Nancy Rommelmann for $200 million in damages for failing to tell her about a verbal offer Mr. Stanford had made to settle the matter back in 2008 before the feds picked him up on ponzi charges and before he was imprisoned and forced to hire a public defender on account of the fact that he is now penniless and broke. (BTW he was hospitalized today after a fight with another inmate, poor guy.)
Understandably, Susan is not a happy camper. After all, the feds are looking to take her condo and her daughter’s condo as all “fruits of the poisonous tree” of her husband’s fraudulent business dealings. Says the ABA Journal:

Allen Stanford’s assets have been frozen and a court-appointed receiver is seeking to sell Susan Stanford’s 7,000-square-foot Houston home as well as a 2,800-square-foot condominium owned by their daughter.

First of all, I don’t understand this statement by the author of the article, Debra Cassens Weiss. I mean, how does a “court appointed receive seek to sell this [man’s] property” when he has not been adjudicated guilty as yet? Where is the due process? Where is the constitutional guarantee that you are innocent until proven guilty? How do you just appoint a receiver to sell this man’s property when the state/feds have not proven that he in fact committed this fraud? That is my threshold question.
But as it relates to the divorce attorney’s alleged boo boo, I have a big question: Was the attorney obligated to disclose a “verbal” offer to the client? An offer to settle the case for $200 million would seem to me one of those ripe issues that need to be in writing. That is number one. But, number two, even assuming there is no such requirement that the offer be in writing to put the onus on the attorney, how does Ms. Sanford prove this verbal offer was made to her lawyer in the first place? What? She subpoenas her incarcerated husband who is on trial for deceitful conduct? Has she ever heard of the impeachment rules and Federal Rule of Evidence 609? Oh, wait. I guess he made the offer through his attorney? So it would be attorney vs. attorney? Is that it? Mr. Stanford’s attorney would have to get up and swear under oath that he relayed this offer to Mrs. Stanford’s attorney and then Mrs. Stanford would have to prove that her attorney did not relay this to her. I see a lot of holes in this scenario how ever you twist it, though. I see some difficulty in Mrs. Stanford being able to pin this on Ms. Rommelmann, her attorney. I mean, nice try, but I don’t think Stanford can win this one. All Ms. Rommelmann has to say is that she told Mrs. Stanford on the phone and Mrs. Stanford basically said “hell no.” And that would be credible. I mean, her husband was worth billions. Why would she have agreed to take $200 million at that time, having no clue that seismic earthquake that was going to shift her life into a nightmare just a few months later?
But my biggest question of all, is, even assuming Mrs. Stanford can prove this verbal offer was made and that her attorney in fact failed to disclose it, is this really malpractice? I mean, there is the not so small issue of RICO – racketeer influenced and corrupt organizations statute. I learned about this bad boy with the Bernie Madoff case. And what I think that statute does is it pins down ALL the fruits of the fraud even if the fraud occured years back and even if the parties are now divorced (which, unfortunately for Mrs. Stanford, she’s not even divorced yet!).
For instance, after Madoff, Janet Walsh Schaberg, another divorced woman whose husband was accused of fraud, is pretty much in danger of losing her multi-million dollar apartment which she got as part of a divorce settlement from him, even though the settlement occured years ago and she is now remarried at the time the fraud is discovered.
All that gobbledeegook is to say that Susan Stanford probably would not have gotten $200 million in settlement anyway even if the attorney had told her about the offer and even if she had accepted. And if she did get such a settlement, then under RICO she would have had to forfeit all of it to the defrauded investors – like Ruth Madoff. (Of course, this is all assuming that the prosecution makes out its prima facie case of fraud against Mr. Stanford.)
Assuming the Feds do make out their case, then is attorney Rommelmann guilty of malpractice to the tune of $200 million? Given that Mrs. Stanford would not have been entitled to diddly squat under these circumstances? I kinda doubt it. I could be wrong. But I kinda doubt it. Very strongly too.
Of course, if Mr. Stanford beats the rap, then maybe the Mrs. will have something to discuss with her attorneys and maybe Rommelmann will have to call up her insurers and have her own discussion with them cause she will need defense counsel. But ultimately, I still have a big problem with this “verbal” offer. I think that needs to be in writing for the Mrs’ lawsuit against her attorney to stick. I mean, Statute of Frauds….
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