Fifth Circuit Rules Against Golf Channel In Stanford Case

Thanks to reader Steve for Jay Adkisson's fascinating analysis of the Fifth Circuit Court of Appeals decision reversing a District Court. The Fifth Circuit court ruled that $5.9 million Golf Channel received for an advertising package with Stanford International Bank should go to the victims of Allen Stanford's Ponzi Scheme that impacted many, including golfers Vijay Singh and Henrik Stenson.

From Adkisson's take on Forbes.com, which takes issue with the bizarre precedent set by the Fifth Circuit:

This case illustrates the dangers to a business that deals with a debtor, even unwittingly. If this decision is followed, it creates tremendous risk for any service business that deals with a debtor, since between the business and creditors, the creditors may win. This decision imposes what amounts to a significant duty on businesses to “Know Your Customer” and to thoroughly investigate a large customer’s affairs before taking their money.

How realistic is such a requirement? Not very. Just think about this case: Was The Golf Channel supposed to divine that our world renown Knight Commander was just another Bernie Madoff before the SEC did? As silly as that sounds, it is what the Black Robes sitting on high at the Fifth Circuit just told us.

This was interesting too:

Second, one might suggest that the victims of a Ponzi scheme are not wholly without sin, since they themselves certainly failed to conduct adequate due diligence before getting into the scheme. Victims should have known that chasing higher returns necessarily means higher risk, recalling the late Will Rogers’ famous saying that “I’m not so concerned about the return on my money, as I am about the return of my money.”

The full opinion in Janvey v. Golf Channel, 2015 (5th Cir., Mar. 11, 2015) can be seen here.