Allen Stanford's Investors Want Alleged Swindler's Political Donations Returned

Democratic and Republican lawyers are scrambling this week to figure out how to contend with an unusual lawsuit filed by the Texas official tasked with recovering money spent by Allen Stanford, the alleged mastermind of an $8 billion Ponzi scheme.

More than $1.6 million from Stanford and his businesses went to fund Democratic and Republican Congressional campaigns between 2000 and 2008, and now the investors want the political parties to give that cash back, according to a lawsuit filed in U.S. District Court.

The suit could be an important one to watch, because of a recent spate of alleged swindlers who also happen to be prolific political donors. Most notable was Florida lawyer Scott Rothstein, convicted last month in a $1.2 billion Ponzi scheme. He and his law firm had parceled out more than $600,000 to politicians in the past five years.

The case against the party committees is also notable because it is built, in part, on an unusual rationale -- the contention that Stanford didn't actually get anything in return for his contributions. Under a quirk of the law, if the lawyers for the political parties can't show that he did receive some tangible benefit, they may have to come up with the money. And it's a point they'll have a hard time contesting, since they can't exactly argue that he bought influence with his money.

Ralph S. Janvey, the lawyer who filed the case in Dallas Tuesday, said he began requesting the money in writing a year ago and continued making written requests until earlier this month. The party committees "have ignored these requests, and, as a result, the Receiver has been forced to file this lawsuit seeking the return of the funds," Janvey wrote.

Overall, the Democratic Senatorial Campaign Committee received the largest share of the Stanford money -- $950,500 – according to the Texas lawsuit. The National Republican Congressional Committee received $238,500, the Democratic Congressional Campaign Committee got $200,000, the Republican National Committee took in $128,500, and the National Republican Senatorial Committee received $83,345.

Lawyers and press aides for several of the political committees initially told ABC News they thought the case would be dismissed right away, and they saw little chance they would have to give the money back.

"The money's been spent. It's not going to be returned," one party official said, speaking on the condition he not be named because the litigation is pending.

But after spending more time reviewing the situation, several campaign finance lawyers told ABC News that this could actually be a far more tricky case than it initially seemed.

Under election laws, there are only a small handful of legal reasons a political committee would be forced to return contributions. They would have to refund money if it came from a corporation, came from a foreign source, or was funneled through an illegal straw donor arrangement, said Lawrence M. Noble, a former chief counsel to the Federal Election Commission.

"On the other hand, if the receiver has an independent legal basis for getting the money back, I don't think the party committees would be treated any differently than any other recipient of Stanford funds, whether it is a charity or a business," Noble said.

And that, potentially, is where the trouble starts for the Democratic and Republican committees, said Jan Baran, a Washington election lawyer.

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