Lawyer’s Noisy Withdrawal from Stanford Case

sjoblomLawyers must protect their clients’ confidence, but they can’t aid in the commission of a potential crime. The Wall Street Journal covered some of the facts leading up to the “noisy withdrawal” of Thomas Sjoblom of Proskauer Rose LLP from their representation of the Stanford Financial Group: Top Lawyer’s Withdrawal From Stanford Case Waves a Flag.

There was much consternation over the idea of an attorney whistle-blowing on her client back when Sarbanes-Oxley was adopted. Legal ethics, business ethics and ethics were at odds. An attorney is divided between doing what is right for society at large, for her client and her own income.

Lawyers represent guilty people. They are there to help them through the legal system and ensure the government did not overstep its constitutional limitations. Stanford was in trouble and needed the help of lawyers. In this time of crisis Stanford’s lawyer ended his representation.

Charlie Green finds much fault with the approach and found the use of “disaffirm” to be a bit trivial for the magnitude of the underlying scandal.  Stephen Gillers in his comment points out that “the word ‘disaffirm’ is actually a term of art in New York legal ethics.”

I am giving Mr. Sjoblom the benefit of the doubt that he did not find out about the fraud at Stanford until sometime in late January or early February when they had to respond to the SEC subpoena. It certainly sounds like the February 10 testimony of Laura Pendergest-Holt, a Stanford executive, in front SEC investigators did not go well. She got arrested and Mr. Sjoblom made his noisy withdrawal.

There is a lot of work ahead for Stanford’s lawyers in sorting out the facts, defending the company and defending the executives. Sjoblom stepped away from this representation and turned down hundreds of thousands if not millions of dollars or revenue to be made from the representation.

There is a big difference between defending a criminal and being a witness to a crime. It sounds like Mr. Sjoblom realized that he had become a witness to a crime and incapable of defense.

Someday we may hear the true story of what happened. As with the Madoff scandal, I am very interested in finding out the underlying facts. Did they start out bad? If they originally had good intentions, what made these people go bad?

See also:

The Law:

17 CFR 205.3(b) provides:

Duty to report evidence of a material violation. (1) If an attorney, appearing and practicing before the [Securites and Exchange] Commission in the representation of an issuer, becomes aware of evidence of a material violation by the issuer or by any officer, director, employee, or agent of the issuer, the attorney shall report such evidence to the issuer’s chief legal officer (or the equivalent thereof) or to both the issuer’s chief legal officer and its chief executive officer (or the equivalents thereof) forthwith. By communicating such information to the issuer’s officers or directors, an attorney does not reveal client confidences or secrets or privileged or otherwise protected information related to the attorney’s representation of an issuer.

This regulation was promulgated under Section 307 of Sarbanes Oxley Act of 2002.

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5 Responses to Lawyer’s Noisy Withdrawal from Stanford Case

  1. Eliot Bernstein March 13, 2009 at 6:42 am #

    Sjoblom from Proskauer Rose appears equally as guilty of misleading SEC officials in those transcripts, confirming that she met only with him in preparing when he knew it was a lie. The FBI should arrest Sjoblom as it appears he was well versed with the swindle and how to lie to federal authorities. It is time attorney’s start paying for all these financial scams they are behind, the accountants get stuck like at Enron, now it is time to hang these dirty lawyers. From the DOJ release of the torture memo’s and legal opinions; it is clear lawyers have begun to break the law even as it relates to torturing people and denying their rights v. protecting them. Lawyers look more like criminals, abusing their Ivy League educations to fraud and scheme to make more and more, instead of just billing hourly.
    Proskauer Rose should be indicted in this, the firm should cease to be, Sjoblom is a former SEC head of discipline and regulation, he obviously knew how to cook books and probably had friends in the SEC, perhaps the person who replaced him, Linda Thomsen, the director of enforcement at the Securities and Exchange Commission who just resigned due to her blind eye to Madoff. How long have they been running scams and controlling the enforcement department, how many more frauds will we find ruining people lives. One-way to find out, grab Sjoblom and put his feet to the fires, put the fear of the devil, a 100 yr sentence on his head and give him 10 minutes to confess or off to Gitmoschwitz with him.
    Proskauer is also in a TRILLION Dollar patent lawsuit in the US Court of Appeals 2nd Circ. Case Docket 08-4873-cv, legally related by Judge Shira Scheindlin to a WHISTLEBLOWER case. According to Scheindlin the case is a MURDER case and where the inventors car was blown up Iraqi style in Boynton Beach Florida, for images of car bombing . This may be the tip of a very large criminal racketeering organization disguised as law firms and using lawyers who act like criminals.
    Perhaps investors should start to review the financials of Proskauer Rose for their assets, I hear those criminals disguised as attorney’s have done well from all these scams.

    Eliot I. Bernstein
    Iviewit Technologies, Inc.
    A lawyer with no ethics is simply a criminal, no joke.

  2. Doug Cornelius March 13, 2009 at 7:04 am #

    Eliot –

    You have a lot going in your comment.

    In all my years of practice I have not run into any law firm that was purposefully trying to help their clients break the law. Sure, there are ethically-challenged lawyers. There are ethically challenged people in every line of business.

    Lawyers tend to be kept at arms length. In particular I suspect that the law firm had no idea that Stanford was not investing in the type of assets they were supposed to be investing in.

    I am giving Sjoblom the benefit of the doubt until more facts come out.

  3. Eliot Bernstein March 20, 2009 at 9:51 pm #

    Doug – Lawyers are the guys who approved torture for Bush. Gonzales was a lawyer. Lawyers removed habeus. Are these lawyers or criminals disguised as lawyers? The legal profession is behind all these scams, how bout Dreier? I have respected lawyers for almost all of my life, many are my dearest friends but their is Mafia style law group that has emerged that has infiltrated law and government and must be stopped by honorable lawyers, who almost seem to afraid to take them on. I guess the lawyer who went to Cheney got shotgunned in the face for his attempt to expose an issue and Ashcroft was probably a click away from murdered if not for Comey. Sandra Day O’Connor left the bench stating the country was in danger of being taken over by a group plotting a dictatorship and the Bush lawyers nearly created one. Where have ethics gone, out the window for our young new greed centered lawyers, who must be as wealthy as their clients and yearn for power through law not honor. You gotta be kidding though that Sjoblom did not know, he was an SEC enforcement officer, he was coaching these people in an airport hanger to lie to the SEC, he thought at the depo that his friends at the SEC would continue the blind eye, like they did to Madoff dispite Markopolos and others. Some law firms are rotten apples, some judges, etc. but the trend has grown and infiltrated law to ruin it for the truly honorable attorneys.
    Investors who have been burned in these scams should start to seek redress from the lawyers who were involved with these scams. I have been trying to notify regulators and authorities of this TRILLION DOLLAR scam that is putting states like New York and Florida at huge risk, as well as, companies like Intel, Lockheed, SGI and IBM. The states and companies involved in the fraud fail to acknowledge the risk exposing shareholders and citizens to impending liabilities. Investigators, courts and federal agents ignoring the crimes, including a car bombing attempt on my life. I know how Harry Markopolos felt.
    Did I hear Proskauer Rose is involved in Madoff (involved many clients too) and acted as Allen Stanford’s attorney. Investors who lost money in these scams should start looking at the law firm Proskauer’s assets for recovery. First, Proskauer partner Gregg Mashberg claims Madoff is a financial 9/11 for their clients, if they directed you to Madoff sue them. Then, Proskauer partner Thomas Sjoblom former enforcement dude for SEC and Allen Stanford attorney, declares PARTY IS OVER to Stanford employees and advises them to PRAY, this two days before SEC hearings. Then at hearings, he lies with Holt to SEC saying she only prepared with him but fails to mention Miami meeting at airport hanger. Then Sjoblom resigns after SEC begins investigation and sends note to SEC disaffirming all statements made by him and Proskauer, his butt on fire. If you were burned in Stanford sue Proskauer.

    Proskauer Rose and Foley and Lardner are also in a TRILLION dollar FEDERAL LAWSUIT legally related to a WHISTLEBLOWER CASE also in FEDERAL COURT. Marc S. Dreier is also a defendant in the Federal Case.
    The Trillion Dollar suit according to Judge Shira Scheindlin is one of PATENT THEFT, MURDER AND A CAR BOMBING. For graphics on the car bombing visit
    The Federal Court cases
    United States Court of Appeals for the Second Circuit Docket 08-4873-cv – Bernstein, et al. v Appellate Division First Department Disciplinary Committee, et al. – TRILLION DOLLAR LAWSUIT
    Cases @ US District Court – Southern District NY
    (07cv09599) Anderson v The State of New York, et al. – WHISTLEBLOWER LAWSUIT
    (07cv11196) Bernstein, et al. v Appellate Division First Department Disciplinary Committee, et al.
    (07cv11612) Esposito v The State of New York, et al.,
    (08cv00526) Capogrosso v New York State Commission on Judicial Conduct, et al.,
    (08cv02391) McKeown v The State of New York, et al.,
    (08cv02852) Galison v The State of New York, et al.,
    (08cv03305) Carvel v The State of New York, et al., and,
    (08cv4053) Gizella Weisshaus v The State of New York, et al.
    (08cv4438) Suzanne McCormick v The State of New York, et al.


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