Ralph Janvey, the court-appointed receiver administering the affairs of the Stanford group of companies, is not a popular man.

The SEC has hotly protested his requests to recoup millions of dollars in fees and expenses for his work (and that of his army of lawyers and forensic accountants) unravelling the structure and accounts of the Stanford companies.

Past and present holders of those so-called certificates of deposit – the high-yielding accounts at the centre of an alleged $7bn Ponzi scheme – issued by Stanford International Bank in Antigua have been less than impressed with Mr Janvey’s attempts to claw back both principal and interest.

(The SEC is none too pleased with those claw-back attempts, either. The regulator has asked Janvey to drop his lawsuits against some 600 investors; the SEC also wants any fees related to that effort dropped from the fee-request filings.)

Sir Allen Stanford and his fellow accused – Laura Pendergest-Holt and James Davis – have been demanding for months that the receiver unfreeze some of their assets (or rescind his claim to their Directors & Operators insurance policies) so they can pay their lawyers. Both Sir Allen and Ms Pendergest-Holt have pleaded not guilty to all the charges against them; Mr Davis, the former CFO, entered a guilty plea as part of an agreement with prosecutors.

Now, John Little — appointed by the court to be an examiner and investor advocate — has weighed in on Mr Janvey, saying in court documents filed on Sunday that the receiver’s latest fee application “(like his first one) is alarming”. Emphasis FT Alphaville’s:
Six months after his appointment, the Receiver concedes that his efforts to recover assets on behalf of defrauded investors have turned up little more than “a few million here and a few million there.”

Despite the scant likelihood of any significant recovery for the investors, the Receiver has incurred fees and expenses in excess of $27 million during the first three and one-half months of his service, and he is maintaining (and projects that he will continue to maintain) an average “burn rate” or approximately $1.1 million (or more) in fees and expenses each week.

At this rate of consumption, simple math suggests the substantial possibility that the whole of the Receivership Estate could end up, not in the hands of the victimized investors, but in the pockets of the Receiver and the firms he has retained

The language is scathing throughout (see for instance “The Receiver Request Reimbursement for Work and Expenses of Questionable Necessity” and “What Benefit is Ernst & Young Providing to the Estate?”), but being navel-gazing media types we were especially drawn to Part X: The Investors Ought Not Have to Pay for the Receiver’s PR Firm.

Which includes insights that suggest Mr Janvey and his team take a rather old-school approach (read: expensive) to media monitoring:

…the Receiver needs a PR firm to prepare what are essentially press clipping “scrapbooks” on an almost daily basis. The invoices from Pierpoint Communications include a large number of entries relating to the preparation of “Daily Media Coverage Reports” containing “all media coverage (including top tier, local, regional, trade, and blogs) from the day.”

These “Media Coverage Reports” apparently include any and all media reports relating to the Reciver or Stanford (presumably gathered on-line).

To make matters worse (and more expensive), these Media Coverage Reports are not forwarded to the Receiver and his team on-line or electronically; rather they are “printed, bound, tabbed, and assembled” in hard copy (typically, seven copies are made) for distribution.

…

Mr Little suggests that while Mr Janvey “may be keenly interested in what the media is saying about Stanford and the Receivership, and may even want to fill a book shelf with his “Daily Media Reports”", he finds no benefit to the Stanford estate or to investors from these efforts, and argues the associated fees ought not be approved.

Mr Janvey had not, as of publication, filed a response.

This entry was posted by Stacy-Marie Ishmael on Tuesday, September 1st, 2009 at 12:30 and is filed under Capital markets, People. Tagged with ernst & young, ralph janvey, Sir Allen Stanford, Stanford International Bank. Edit this entry.