DALLAS (CN) – The federal judge overseeing the receivership of accused Ponzi schemer R. Allen Stanford rejected a motion to intervene from a group of investors who said the court-appointed receiver is spending too much on lawyers, recovering too little money and have too many conflicts of interest.
U.S. District Judge David Godbey ruled Monday that the investor committee he approved last year adequately represents the interests of victims.
“The receivership is unwieldy enough as it stands, and it has been slowed by a variety of factors beyond the parties’ control,” Godbey wrote in his 14-page ruling.
“An additional layer of overhead will not help.”
The movants argued two key points. First, that the receiver, Ralph Janvey, with Krage & Janvey, “has failed in his asset recovery efforts, instead lavishing exorbitant payments on his lawyers, forensic accountants, and other retained professionals to the detriment of the movants’ hopes for recovery.”
The unhappy investors also claimed that the committee suffers from several conflicts of interest. As an examples, they said that other investors’ attorneys, who make up most of the committee’s membership, have entered into contingency fee agreements with the receiver to prosecute certain asset-recovery suits on his behalf.
According to The American Lawyer magazine, Janvey has recovered $209 million of the $7.2 billion allegedly lost to fraudulent certificates of deposit. Of that $42.9 million has been spent on professional fees and another $49.2 million was spent on winding down Stanford entities’ operations.
In contrast, Irving Picard, with Baker & Hostetler, liquidation trustee for Bernard Madoff’s $70 billion Ponzi scheme, has recovered more than $10 billion for investors so far and spent only a small fraction of that on legal and professional fees.