Stanford Lawyer Quits over Cash

Scott Cohn

Accused fraudster Allen Stanford once claimed a net worth of more than $2 billion. But with all of his assets frozen by a federal judge, he has no funds to pay his high-powered criminal defense lawyer, Dick DeGuerin of Houston.

Stanford replaced DeGuerin this afternoon, and in court papers filed this evening, DeGuerin writes that he and his team "are unwilling to go forward without the assurance of being paid for work in the future."

The filing says the change of attorneys is being made at Stanford's request.

The court filing sheds only a little light on the terse statement e-mailed by Stanford's Washington public relations firm Friday afternoon saying that Robert Luskin, a partner at Patton Boggs, was replacing DeGuerin as Stanford's criminal defense counsel.

DeGuerin apparently got the same e-mail, according to the court filing, which says Stanford had refused to authorize DeGuerin to seek assurances he would be paid.

DeGuerin had been representing Stanford since March, but was never paid because of the asset freeze. DeGuerin has repeatedly asked the Court to release funds for Stanford's defense, which the attorney has said could ultimately cost $20 million. But prosecutors have argued--succesfully so far-- that all of Stanford's funds are tainted by fraud.

It is unclear how Luskin will be paid either. Earlier this year, Stanford replaced his Houston civil attorneys as well, and one of his new civil attorneys is also a partner at Patton Boggs.

DeGuerin leaves a number of matters pending in Stanford's case, beyond the 21-count indictment against Stanford returned last month. Just this week, DeGuerin filed a motion "for relief from oppressive jail conditions" at the federal detention facility where Stanford is being held.  And a federal appeals court is considering whether Stanford should be freed on bail pending his trial. The judge in the case, David Hittner, revoked Stanford's bail last month after ruling that Stanford is a flight risk.

Receiver to Appeal Clawback Ruling

The court-appointed Receiver in the Stanford Financial fraud case says he will appeal a judge's ruling limiting his ability to pursue clawback claims against Stanford investors.

U.S. District Judge David Godbey ruled after a Friday evening hearing that Receiver Ralph Janvey cannot try collect to principal from hundreds Stanford investors, but can continue to go after interest payments in the alleged Ponzi scheme. Janvey had argued all the funds were fraudulent proceeds from bogus certificates of deposit. He wanted to seize all the money and distribute it equally among all 28,000 Stanford investors.

But Godbey ruled the law on clawbacks of principal was unclear. He did, however, stay his ruling for ten days to allow Janvey to appeal to the Fifth Circuit Court of Appeals, and in a statement Saturday afternoon, Janvey says he will do just that. In the meantime, the statement says, all clawback activity against the investors--principal and interest--will cease.

The decision does not affect Janvey's claim against 66 former Stanford advisors, who he says received huge commissions for selling bogus CD's.