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Posted by: Matthew Goldstein on April 27
Well-known corporate lawyer Thomas Sjoblom is no stranger to high-profile court room fights. But in Sjoblom’s latest legal tussle, the former Securities and Exchange Commission attorney may be fighting for his own reputation.
Two months ago, when the SEC filed civil fraud charges against Texas financier R. Allen Stanford, a lot of people in the legal community were applauding Sjoblom for doing the right thing. On Feb. 14, just three days before the SEC sued Stanford, Sjoblom quietly sent a note to the regulators in which he said, “I disaffirm all prior oral and written representations made by me and my associates to the SEC staff regarding Stanford Financial Group and its affiliates.’’ The conventional wisdom was that Sjoblom’s so-called “noisy withdrawal’’ is what lawyers are supposed to do if they suspect a client may have broken the law.
But now Sjoblom’s role in the still unfolding investigation of the $8 billion fraud at Stanford’s financial empire isn’t so clear. Sjoblom, a partner in the Washington, D.C. office of Proskauer Rose, has signed-up with a former federal prosecutor to represent him in the ongoing investigation of Stanford, BusinessWeek has learned. Sjoblom, a former federal prosecutor himself, is being represented by James Cole, an attorney who made has defended everyone from Enron executives to a former governor of Louisiana. Cole is working behind the scenes to convince the SEC and federal prosecutors that Sjoblom did indeed do nothing wrong.
Sjoblom could not be reached for comment. But Cole said, “We’re providing the government with whatever information we can.’’
And the investigation isn’t all Sjoblom has to worry about. Stanford’s former chief investment officer, Laura Pendergest-Holt, the only person criminally charged in the matter, filed a legal malpractice lawsuit against Sjoblom last month. Pendergest-Holt claims Sjoblom led her to believe he was acting as her lawyer when she testified before SEC investigators in early February. Federal prosecutors have charged Pendergest-Holt with obstructing justice by allegedly giving misleading testimony to the SEC. It was soon after the SEC questioned Pendergest-Holt that Sjoblom delivered his “noisy withdrawl’’ note. “I’m surprised’’ says Brent Baker, one of Pendergest-Holt’s attorneys. “Many courts agree that it’s a fundamental right that has to be clearly articulated to a person about who a lawyer is there it represent.’’
Of course, none of this is to say Sjoblom did anything wrong. And hiring a seasoned white-collar defense lawyer may be the prudent thing for Sjoblom to do, especially with federal prosecutors believed to be days away from making a decision on whether to indict Stanford and others.
But the early view of Sjoblom, who represented Stanford’s firm for nearly four years, as some sort of fraud-buster, appears to be wilting. “Resigning a week before the house of cards collapses is not going to absolve someone of scrutiny,’’ says Thomas Ajamie, a Houston securities lawyer who represents several Stanford customers.
This much is certain: Sjoblom’s noisy withdrawal from the Stanford case is still making lots of noise.
BusinessWeek's Adrienne Carter, Jessica Silver-Greenberg, and David Henry deconstruct the mysteries of high finance, Wall Street, and hedge funds for pros and ordinary investors. E-mail them directly if you've got tips about big deals, a hedge fund, or even securities industry gossip.