U.S. District Judge David C. Godbey in Dallas, in an order yesterday, imposed a 10 per cent “holdback” on out-of-pocket expenses. In a separate order today, Godbey approved the payment of $1.6 million in fees and expenses that the receiver, Dallas lawyer Ralph Janvey, had requested and said he could apply later for the held-back amount of $382,253.
Janvey’s outside counsel, Kevin Sadler, argued at a hearing yesterday that the receiver’s team has been working at the same pay rates since 2009. Sadler said that Janvey, who regularly charges his clients $500 an hour, has been billing $340 an hour on the Stanford case and then discounting that by 20 per cent.
A federal jury in Houston last month found Stanford, 62, guilty of fraud in what prosecutors said was a $7 billion scheme involving bogus certificates of deposit at his Antigua-based bank. He’s scheduled to be sentenced on June 14. Janvey, whom Godbey appointed in February 2009 — four months before Stanford was indicted — and his outside professionals, including Baker Botts LLP (1143L), have been paid more than $52 million. That sum doesn’t include a court-imposed $16 million hold-back.
The Committee, which speaks for the more than 20,000 investor victims of Allen Stanford’s Ponzi scheme, opposes the relief requested by the Receiver and his team of professionals. The Receiver’s professionals have been well compensated in the 3 years of this Receivership, having collected well in excess of $52 million in fees (with an additional almost $16 million in reserve via the holdback). During this same time period the investor victims have not recovered a single penny as there have been no distributions. Given the current state of this receivership, the Committee cannot agree to giving the Receiver’s professionals what is widely perceived within the investor community as a “raise”.
Therefore the Committee opposes the relief requested.