Allen Stanford drops lawsuit against government lawyers

R. Allen Stanford, the indicted financier, dropped a lawsuit that accused attorneys with the U.S. Justice Department and Securities and Exchange Commission of “abusive” law enforcement.

U.S. District Judge Ewing Werlein in Houston on March 21 granted a request by Steven Cochell, a Stanford attorney, to dismiss the case filed last month. Stanford had sought $7.2 billion in damages.

The case was filed two years after the SEC accused the deposed Stanford Group Co. principal of leading a $7 billion investment-fraud scheme. Stanford, who was indicted on parallel criminal charges in June 2009, has denied all allegations of wrongdoing.

“Plaintiff concludes that the claims in this action will be preserved without the pursuit of this case at this time,” Cochell said in his March 18 filing.

Stanford had alleged the federal government used more than $51 million of his assets to pursue the cases against him. “The agents have engaged in unfair, abusive law-enforcement methods and tactics,” violating Stanford’s rights under the U.S. Constitution, according to the complaint.

Among the 12 individual defendants named in the lawsuit were lead prosecutors Paul Pelletier and Gregg Costa and lead SEC lawyer Stephen Korotash. Stanford didn’t directly sue any agency of the federal government.

Gag Order
Laura Sweeney, a Justice Department spokeswoman, declined to comment, citing a gag order imposed in the criminal case by U.S. District Judge David Hittner. Kevin Callahan, an SEC spokesman, didn’t immediately reply to voice-mail messages seeking comment.

The financier, who turns 61 today, is being held without bail pending the outcome of his criminal trial and is undergoing treatment for a prescription drug addiction in the Federal Medical Center at the Butner Federal Correctional Complex in North Carolina.

–Bloomberg News–