Stanford receiver seeks $19.9 million

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Lawyers and accountants culling through the wreckage of the Stanford Financial Group companies are seeking almost $20 million in fees and expense reimbursements for their first two months of work. Dallas attorney Ralph Janvey filed the $19.9 million bill in a Dallas federal court Friday, on behalf of the small army of professionals from 14 firms that have been trying to track down money from what the government alleges is an $8 billion fraud. (Get details of his bill here.) Janvey said the firms discounted their fees 20 percent, about $5 million, “for the benefit of Stanford investors and other claimants.” But the Securities and Exchange Commission, which filed a civil fraud complaint against the firm and its top executives in February, thinks the fees should be lower. “We recognize that the receiver and those working for him were dropped into the middle of a storm and confronted unprecedented challenges that necessitated an extraordinary level of effort, and they have performed admirably,” said Steve Korotash, associate regional director of enforcement for the SEC in Fort Worth. “Nonetheless, in light of the staggering losses that investors will suffer in this case, billing rates that would be supportable in traditional business litigation are not appropriate here.”

Accounting workAccounting work is the biggest chunk of the proposed bill for Feb. 13 through early April. FTI Forensic and Litigation Consulting is asking for $6.1 million in fees and $562,869 in expenses. Accounting firm Ernst & Young is asking for $3.4 million in fees and $273,638 in expenses. Houston-based law firm Baker Botts, which has served as lead counsel, is asking for $5.7 million in fees and $180,605 in expenses. Dallas law firm Thompson & Knight, which did much of the heavy legal lifting overseas, has asked for $1.8 million in fees and $69,533 in expenses. Janvey’s law firm, which has coordinated the overall effort, is requesting $521,898 in fees and $54,990 in expenses. Fees requested by other firms make up the balance.

Judging the fees Judging how appropriate the fees and expenses are can be difficult, said Nancy Rapoport, a law professor at the University of Nevada, Las Vegas, who specializes in bankruptcies. “The main thing to look for is how much of a bill is for investigation of what went wrong and what can be recovered,” she said. “If money is for fixes for recoveries, then it’s money well spent.” Accounting and legal fees for the first 41/2 months of the bankruptcy of Lehman Brothers totaled more than $98.8  million, according to court documents. In that case, FTI’s reimbursement request was for $5.2 million, while lead counsel firm Millbank Tweed requested $12.5 million for its work. Dick DeGuerin, an attorney for Stanford Chairman and CEO R. Allen Stanford, said the receivership’s bills make his request for $10 million to put up a legal defense “look like chump change.” “Janvey’s using Stanford’s money to prosecute and destroy him while denying Stanford funds to defend himself, or even for living expenses,” DeGuerin said.


Hourly rates The highest hourly rates were charged by about a half-dozen Baker Botts partners, who came in at $555 per hour after the 20 percent discount. Several Ernst & Young partners came in at $532 per hour with the discount while FTI had several senior managing directors with reduced rates of $520 per hour. Janvey and his partner, Ben Krage, reported billable hourly rates of $450. The SEC’s fraud lawsuit names Allen Stanford, two other Stanford Financial executives and affiliated companies including Stanford International Bank on the Caribbean island of Antigua. Earlier this week, receivers appointed by Antiguan authorities said they have found about $1 billion in bank assets but liabilities to investors of $7.2 billion.

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Source:http://www.chron.com/disp/story.mpl/business/6426332.html

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