HOUSTON, (Reuters) – Allen Stanford is a logical target for the ire of his former investors, but now the man named to track assets from the alleged fraud led by the Texas financier faces heightened criticism and calls for his removal.
Dallas attorney Ralph Janvey is being accused by investors, regulators and politicians of overreaching his authority and overspending on legal bills and consultants hired to help him.
The U.S. Securities and Exchange Commission, who recommended Janvey for the position, now seeks to limit Janvey’s role in the case, while at least one U.S. senator wants him booted from the job.
About $269 million in Stanford’s assets has been recovered and Janvey has asked U.S. District Judge David Godbey in Dallas to approve about $27 million in fees, according to the receiver’s records.
In court documents, the SEC has called the amount of the fees excessive. Godbey, who appointed Janvey in February, has not yet ruled on the fee application.
In February, the SEC charged Stanford with fraud, accusing him of leading a $7 billion Ponzi scheme using certificates of deposit issued by his Antigua bank. Stanford, who also faces criminal charges related to the alleged fraud, has denied any wrongdoing.
The SEC also wants to limit Janvey’s attempts to pursue principal and interest from some Stanford CD investors, saying the proceeds were tainted. Janvey has filed a lawsuit seeking those so-called claw back funds, but the SEC has argued in court papers that the lawsuit may harm innocent investors.
Representatives for Janvey did not reply to an email seeking comment.
Now, the patience of investors, politicians and even the SEC appears to be wearing thin.
At a U.S. Senate Banking Committee field hearing held in Baton Rouge, Louisiana, on Monday, several hundred investors who attended booed, jeered and hissed when Janvey’s name was mentioned.
Rose Romero, regional director in the SEC’s Fort Worth office, told investors at the hearing that her office was exploring ways to limit the scope of the receivership.
Asked if the SEC would request a new receiver, Romero answered, “I can say that is one of the issues we have under consideration.” She declined to comment further.
Carl Tobias, a law professor at the University of Richmond in Virginia, said the SEC’s tough stance on Janvey is part of the agency’s overall effort to pursue fraud more aggressively.