The Securities and Exchange Commission and one its former officials, Spencer Barasch, were sued Thursday for negligence and misconduct by Baton Rouge attorney Edward Gonzales on behalf of nine Lafayette area investors who lost money in Allen Stanford's alleged $8 billion Ponzi scheme.

According to Gonzales, and as many as 50 plaintiffs are expected to join the suit, Robert J. Dartez LLC, et al v. the United States of America, filed in federal court in Dallas. “The others will be added as their six-month waiting periods [from date of filing an administrative claim] pass,” he says. The nine local clients are seeking almost $19 million, but Gonzales says his clients lost as much as $66 million in the alleged fraud.

Barasch, now a partner at the Dallas law firm Andrews Kurth, worked for the Fort Worth office of the SEC, at one time serving as head of its enforcement program. The suit alleges that it was under his watch that Allen Stanford swindled billions out of investors. Stanford, 61, remains in jail awaiting trial on criminal charges. He denies any wrongdoing.

About a year ago, an SEC inspector general’s 151-page report held Barasch up as a poster child for an agency now established to have missed one of the biggest investor scams of all time. The report found that for years he looked the other way on Stanford’s behalf. The suit cites the IG report, which noted other improper acts by Barasch, saying that he “sought to represent Stanford on three separate occasions … and represented Stanford briefly in 2006 before he was informed by the SEC Ethics Office that it was improper to do so.”

According to the suit, “[Stanford International Bank] and its affiliated or related companies, including Stanford Group Company (SFG), were known at all times material by the SEC to be participants in a massive Ponzi scheme, and the SEC, which has a mandate to protect the public interest, in this case had both the authority and the duty to put an end to this scheme.” If not for the "negligent acts and omissions, misconduct, and breaches of duty by Barasch and his SEC supervisors," and other “inexcusable” acts of negligence by SEC employees, his clients would not have lost their investments, Gonzales claims in the suit.

The Lafayette plaintiffs listed in the suit and the investments they are seeking to recover:
•Robert Juan Dartez LLC, $638,000
•David B. Sturlese, $696,000
•Cynthia R. Dore (who also resides in Houston), $3.09 million
•Randolph J. Hebert, $7.2 million

The other local plaintiffs are:
•Robert Hollier of Opelousas, $4.8 million
•Hollam Pinnacle Group LLC of  Opelousas, $571,000
•Michael R. Robicheaux and Cheryl T. Robicheaux of Breaux Bridge, $1.6 million
•Brittany Robicheaux of Breaux Bridge, $52,000

View the suit here.

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