Stanford Receiver Wants $8.8 Million More for Fees, Expenses

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Ralph Janvey is asking for another $8.8 million in fees and expenses for his work as the court- appointed receiver for the businesses of accused Ponzi scheme mastermind R. Allen Stanford.

Janvey won court approval last month for about $20 million in fees and expenses for work he did from February through May on behalf of investors allegedly swindled out of more than $7 billion through a scheme involving Antiguan bank certificates of deposit. Yesterday’s request covers work by Janvey and 13 accounting and legal firms assisting him from June through August.

Janvey said the latest request reflects the 20 percent discount his team has applied to their standard billing rates throughout the Stanford Financial Group receivership assignment, out of consideration for how little money Stanford’s investors will likely recover. Of the $8.8 million he’s now requesting, Janvey said $2.2 million will be held back in accordance with a court ruling that he defer 20 percent of his billings until the ultimate success of his efforts can be assessed.


“Despite many unanticipated additional activities required of the professionals, these fees and expenses are less than what the receiver projected in the first and second interim fee applications,” Kevin Sadler, Janvey’s lead attorney, said in the filing.

Stanford, who is in jail awaiting trial on 21 felony counts that mirror allegations by the U.S. Securities and Exchange Commission, denies any wrongdoing in connection with CDs sold by Stanford International Bank Ltd. in Antigua. The SEC accused him, some associates and three of his companies of running a “massive” fraud that paid early investors “improbable if not impossible” returns by taking funds from later investors.

Public Defender

Stanford, ranked as the 205th richest American in 2008 by Forbes magazine, with assets of $2 billion, was assigned a public defender after the judge in his criminal case concluded he had no money to pay attorneys. Stanford is fighting Janvey for access to his frozen assets or his company’s legal insurance policy so he can pay his own legal fees.

Kent Schaffer, Stanford’s court-appointed criminal-defense attorney, said Janvey’s fee request was “not surprising” in light of his earlier billings.

“It is sickening what they are doing and the rate at which they are looting the estate,” Schaffer said yesterday in an e-mail. He said Janvey should file a motion asking “that all assets recovered be conveyed to him” so his lawyers wouldn’t have to keep filing requests for additional fees.

Paid Nothing

Dan Cogdell, who represents Stanford’s chief investment officer and co-defendant Laura Pendergest-Holt, said it isn’t fair that Janvey has been paid millions in fees and expenses while the defendants’ lawyers haven’t been paid anything.

“I would feel a lot more sanguine about the situation if the receiver would not continue to be the impediment to our fees being paid,” Cogdell said in an e-mail message. “My firm began working on this matter in February, and we’ve not seen a single cent, due to the receiver’s objections to the insurer paying those fees.” John J. Little, the court-appointed examiner for Stanford’s investors in the SEC case, declined to comment on Janvey’s latest fee request.

“I haven’t had time to wade through the 1,000-plus pages” of supporting invoices and billing records Janvey submitted with his request, Little said in an e-mail. Previously, Little told the judge overseeing the case that he feared Janvey’s billings will consume the entire Stanford estate, leaving nothing for investors.

‘Something’ for Investors

That sentiment was echoed by David Finn, the attorney representing Stanford’s finance chief, James M. Davis, who pleaded guilty to the fraud and is cooperating with the government.

“I hope there’s something left for the investors,” Finn said in an e-mail response to Janvey’s filing.

The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09cv298, U.S. District Court, Northern District of Texas (Dallas). The criminal case is U.S. v. Stanford, 09cr342, U.S. District Court, Southern District of Texas (Houston).

Source: Bloomberg

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