Greenberg Traurig and R. Allen Stanford: no more Teflon shields? ... by gimleteye

When Brickell Avenue was hit by Hurricane Wilma in 2005, the Greenberg Traurig marquee took the hardest hit. But that was just an act of God, not R. Allen Stanford. From its modest beginnings pushing zoning changes in Miami-Dade farmland, Greenberg Traurig grew to a major U.S. law firm. Back in the day that Bob Traurig was collecting sand in his shoes, re-zoning open land for development from one classification to another was its bread and butter. Something new began to emerge out of the regulatory structures in banking and environmental land use law beginning in the 1980's when obscure financial instruments allowed institutions to fundamentally change the balance of debt to equity by relying increasingly on derivatives: all legal and all dependent on smudging calculations of risk.

Highly paid lawyers helped turn plain vanilla, stodgy banks into go-go institutions turbocharged with toxic junk. Over time, the business of concealing, altering, and dressing up risk became huge profit centers for law firms and reflected in all kinds of schemes that also relied on converting natural resources into "derivatives". The best example in Florida: mitigation banking of wetlands. (cf. "Paving Paradise", by Craig Pittman and Matthew Wald) Strange creatures emerged from that swamp, including R. Allen Stanford.

For most of the time I lead opposition to the Homestead Air Force Base scam-- also on the edge of Biscayne National Park-- through which private developers assembled from the board of directors of the Latin Builders Association had prematurely secured a plan to convert the air base to a major, private commercial airport; Greenberg Traurig was on the other side, putting everything in legal wrapping for its clients. Beyond the matter of the law, what I learned was that in relation to land use law, its lobbyists have the equivalent of American Express "black cards"; allowing first and earliest entrance to politicians and their appointees.

When the Stanford story broke in The Miami Herald, I was surprised that Greenberg Traurig was even mentioned. That changed over the past weekend when the Stanford story and Greenberg's likely involvement appeared above the fold, front page. It would snow in Miami, I used to believe, before Greenberg Traurig would appear in a negative light in the Herald. Then I had never heard of R. Allen Stanford whose office was filled with photos showing him arm in arm with top politicians like former Governor Jeb Bush.

Earlier this year, in "Attorney’s involvement for R. Allen Stanford an unlucky coincidence", Miami attorney Alan Greer knocked the Miami Daily Business Review for its portrayal of his client: banking attorney Carlos Loumiet who handled the R. Allen Stanford business as partner with Greenberg Traurig. Greer was referring to a federal lawsuit charging Loumiet with violating banking laws while representing failed Hamilton Bank when he said, "You picked on Mr. Loumiet because he had a problem in the past." (Feb 25, 2009)

It looks like Mr. Loumiet and Greenberg Traurig have a problem, now, in the present. Loumiet took his practice to the law firm, Hunt and Williams, after his work for Stanford at Greenberg. In the November 2003 edition of South Florida CEO, Hunt and Williams managing partner Marty Steinberg gushed, "International has been great... The guys we recruited from Greenberg... Carlos Loumiet ... (his) partners and associates are, I think, some of the top international business lawyers I've ever been associated with." Likely, Steinberg would have no comment now just like Caesar Alvarez, managing partner of Greenberg Traurig, had no comment last weekend for The Miami Herald.

Miami Daily Business Review
February 25, 2009

Attorney’s involvement for R. Allen Stanford an unlucky coincidence


Miami banking transaction lawyer Carlos Loumiet, who faced regulatory enforcement action over his work for the defunct Hamilton Bank, has represented accused swindler Robert Allen Stanford at least since the late 1990s, sources say.

Loumiet is the managing member and registered agent of a Stanford company that bought an exclusive three-acre Gables Estates retreat for $10.5 million in 2003 and helped in Stanford’s effort to revise banking laws in Antigua, a Caribbean banking haven.

Stanford still owns the Coral Gables property through a limited liability company, Casuarina 20, using the property’s address, said Carlos Justo, a Miami real estate broker.

The estate was formerly known as the Tyecliffe castle and later the Wackenhut castle for previous owners George and Ruth Wackenhut of the Wackenhut Corp. Stanford lived in the mansion before demolishing it.

Stanford is accused in a civil action brought by the Securities and Exchange Commission of running a massive scam through his Stanford Group by selling $8 billion in certificates of deposit issued by a bank in Antigua bearing the name, Stanford International Bank. A court-appointed receiver is sorting out his fallen empire. Stanford has not been charged criminally.

A call to Loumiet’s office at Hunton & Williams was forwarded to a spokeswoman. Eleanor Kerlow, senior public relations manager at the firm, wouldn’t confirm whether Stanford is a client but said, "Right now, Hunton & Williams is not representing Stanford Group or Robert Allen Stanford in connection with the SEC matter."

Alan Greer, Loumiet’s lawyer in the Hamilton Bank case and a partner in the Miami office of Richman Greer, said Loumiet’s representation of Stanford shouldn’t reflect badly on him.

"Carlos Loumiet represents hundreds of banks," Greer said. "The fact that he may have done some discrete work for Stanford is of no big moment as far as I know."

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This is the second time Loumiet has represented a high-profile client who ended up in trouble with regulators.

He faced potentially career-ending civil penalties when the U.S. Office of the Comptroller of the Currency accused him of concealing fraudulent actions by several Hamilton Bank executives. An administrative law judge recommended dropping the OCC charges last year, and

Greer said a new comptroller in the Obama administration may render the decision.

Hunton & Williams issued a statement Tuesday, saying, "Carlos Loumiet, a longstanding and distinguished member of the Bar, was cleared of all charges in the administrative proceedings related to two six-year-old reports he coauthored as a partner at another firm prior to joining Hunton & Williams."

Greer said no attorney who accepts work on a client’s behalf can know what will occur in the future.

"You have someone who wants to employ you on an attorney-client basis," Greer said. "Lawyers do their due diligence, and the entity or the individual appears to be reputable, and the thing you’re being asked to do is a legitimate business matter. You handle it."

But Miami attorney Warren Trazenfeld, who sues attorneys for malpractice, said when regulatory enforcement matters arise, lawyers generally know if a client was involved in risky or illegal activities.

"There are always red flags with what are sometimes called toxic clients," he said. "Invariably, when I take the depositions of lawyers who got caught up, intuitively they know there was a problem."

The OCC’s case against Loumiet alleged he hid illegal actions to protect Hamilton Bank executives while with Greenberg Traurig. Hamilton Bank was shuttered in 2002 in one of the largest bank failures in Miami history. The shutdown cost the federal government $127 million, and investors lost all of their holdings.

The OCC is seeking a $250,000 fine and an order barring Loumiet from representing financial institutions.

Even if the administrative law judge’s recommendations are upheld, Greer said Loumiet isn’t likely to live down the taint of the OCC complaint.

"People have read and heard bad things, and that sticks," Greer said. "Even though he’s innocent, it created a mindset in you. You picked on Mr. Loumiet because he had a problem in the past."