US District judge David Godbey, who is presiding over the civil case brought by the SEC against Sir Allen Stanford, has denied the Texan businessman’s petition for the court to partially rescind a freeze on his assets.

Sir Allen made the request in April, saying he needed $10m* to be able to pay for legal representation. At the time, he had already lost one lawyer – Charles Meadows – who told the Financial Times that he quit because the financier “didn’t have access to funds.”

Another of the businessman’s then-lawyers, Jacks Nickens**, argued in the April filing that “the cost of [Sir Allen's] representation in this court and many others through the years it will take to conclude this litigation will almost certainly exceed $20 million.”

The asset freeze imposed in February at the SEC’s request left Sir Allen “with no money to retain counsel to defend himself from an avalanche of allegations in civil actions not just across the country, but around the world, not to mention a possible criminal indictment,” Mr Nickens* further argued in the filing.

Mr Nickens asked that the $10m be put in an escrow account in the name of Dick DeGuerin***,  the high-profile Houston lawyer.

In his response to Sir Allen’s request, filed on Wednesday, judge Godbey said he denied the petition because the businessman had “not yet provided an accounting of personal assets,” which had been requested since February. Moreover, the judge said Sir Allen had “not shown that he has $10 million dollars, or any lesser amount, in personal assets untainted by potential fraud.”

Still, judge Godbey said he would consider an amendment and more “modest” request:
The Court recognizes the difficulty in providing an accounting of assets without funding for professional assistance in this case. Accordingly, the Court will entertain an amended and modest application for attorneys’ and/or accountants’ fees for the limited purpose of aiding Stanford to demonstrate the existence of personal assets unrelated to and untainted by the alleged fraud.

It is not clear how or if Sir Allen is currently paying for his defence in the civil and criminal cases against him, and his attorneys had not at the time of publishing returned calls seeking comment on the matter.

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* – To put that $10m request in context regarding the funds available to the cash-strapped Stanford estate, the US court-appointed receiver Ralph Janvey incurred the wrath of the SEC’s lawyers last month when he requested $20m to cover his fees and expenses. The SEC argued that paying out $20m would “deplete nearly 30 per cent of the cash recovered and under the receiver’s control as of mid-May.” Sir Allen’s lawyers, for their part, described the request as “unmitigated and unbridled”.

** Mr Nickens as well as three of his colleagues from Houston law firm Nickens Keeton Lawless Farrell withdrew their services at the end of May. Mr Nickens cited “communication issues” rather than financial constraints for their departure.

*** Mr DeGuerin told the FT back in March that he had been “engaged, but not retained” by Sir Allen. The difference, as he put it, “is money.” This does not appear to have stopped him from engaging in a spirited defence of Sir Allen.

This entry was posted by Stacy-Marie Ishmael on Thursday, July 2nd, 2009 at 16:24 and is filed under Capital markets, People. Tagged with David Godbey, Dick DeGuerin, Sir Allen Stanford. Edit this entry.