Stanford Receiver’s Team May Get $8.8 Million in Fees (Update2)

By Andrew M. Harris and Laurel Brubaker Calkins

Jan. 25 (Bloomberg) -- Ralph Janvey, the court-appointed receiver for R. Allen Stanford’s businesses, and the firms he hired will be paid almost $8.8 million if the judge in a civil fraud case against the indicted financier approves Janvey’s agreement with federal regulators and an investor advocate.

Janvey and John Little, the lawyer appointed by a federal judge in Dallas to represent Stanford investors in the civil enforcement action, filed a proposed order today in conjunction with the U.S. Securities and Exchange Commission, settling disagreements over each other’s fee applications.

The filing marks the first time Janvey, Little and the SEC have reached agreement on how much lawyers should be paid for their work on behalf of Stanford’s investors.

“Any time we can reach an agreement without further burdening the court, that’s the appropriate way to go,’’ David Reece, the SEC’s lead attorney in the case, said in a phone interview. “We can disagree with the receiver about the scope or a particular expense, but we agree that there’s a lot of work that has to be done and that work costs money.’’

U.S. District Judge David Godbey previously approved $20 million in fees and expenses for the receivership team led by Janvey, the Dallas lawyer appointed after the SEC sued Stanford, three of his businesses and two associates in February.



$7 Billion Fraud



The SEC accused Stanford in the lawsuit of leading a $7 billion fraud scheme. The financier, who also faces criminal charges, has denied all allegations of wrongdoing.

The SEC previously opposed Janvey’s fee request, arguing that he was overstaffing his team with lawyers and accountants who were charging excessive rates. Little previously said Janvey’s fees might ultimately consume the entire estate which might be used to pay investors.

Under their proposed order, Little will receive more than $203,000, or 85 percent of the amount he seeks for his work from July 1 to the end of September.

Janvey, a partner in the Dallas law firm Krage & Janvey LLP, would defer payment of 35 percent of his team’s billings for work done from June to September by more than a dozen firms including the law firm Baker Botts LLP, his outside counsel, according to the filing.

Both would be allowed to apply for the balances they claim at an unspecified date in the future.



Deferring Compensation



Little said the parties reached a compromise when both he and Janvey agreed to increase the amount of compensation each is deferring by 15 percent for the months in dispute. This means Janvey will hold back an additional $2.7 million in billings, while Little will hold back $36,000 in charges, if Godbey approves the deal, Little said today in an e-mail.

“The increased hold-back does not apply to any specific work or category of work, although the receiver, the SEC and I all recognized that the primary area of dispute during the period at issue involved the clawback claims,’’ Little said.

Both the SEC and Little fought Janvey’s attempts to sue investors for proceeds they received from allegedly bogus certificates of deposit issued by Antigua-based Stanford International Bank Ltd.

“My hope, which I think is shared by both the SEC and the receiver, is that this agreement might lead to further collaboration between and among the SEC, the receiver and the examiner, and fewer disputes,’’ Little said.

The accord doesn’t resolve objections by Stanford’s attorneys, who have previously criticized Janvey’s fee requests as excessive.

Stanford’s lead lawyer in the SEC case, Ruth Brewer Schuster, didn’t immediately return a call seeking comment today.