Judge Reels Over Receiver’s $11M Bonus Request in Mutual Benefits Case
Posted Oct 30, 2009 5:17 PM CDT
By Martha Neil
When Chief U.S. District Judge Federico Moreno first saw the bonus requested by the court-appointed receiver in charge of collecting assets for investors who lost some $837 million in the Mutual Benefits viaticals fraud, he thought it was just over $1 million.
Then Moreno realized that he'd misread the figure. It was actually $11 million, reports the Daily Business Review in an article reprinted by New York Lawyer (reg. req.).
“I needed a defibrillator,” joked the judge at a recent hearing in the Southern District of Florida case. “We’re talking about a lot of money.”
Receiver Roberto Martinez says the $11 million he is seeking is fair compensation for the five years of work performed by his own law firm, Colson Hicks Eidson, and Kozyak Tropin & Throckmorton, which serves as primary counsel in the Mutual Benefits case. So far, the two law partnerships, which are based in Coral Gables, Fla., have been paid about $4 million, the Daily Business Review reports. That amounts to an average of $218 and $264 per hour for the two firms, respectively.
The $15 million total payment Martinez is seeking represents 15 percent of the $100 million the legal team recovered for investors. (Another $20 million was obtained through U.S. Securities and Exchange Commission disgorgement orders.)
However, Moreno wasn't the only one who registered a double-take when he saw the proposed legal bill. The SEC's regional trial counsel in the case, Robert Levenson, is protesting the $11 million bonus request, pointing out that it will reduce the payout to investors from the approximately $120 million pot of recovered Mutual Benefits assets.
“The investors are only going to recover a fraction of their losses,” he argued. “These aren’t corporate, market-rate clients.”
Martinez, a former U.S. Attorney for the Southern District of Florida, and other lawyers counter that you get what you pay for. His team stepped up to the plate and preserved assets that might have otherwise been lost, Martinez argues.
To get the best lawyers on such cases, you have to pay a reasonable fee, agreed attorney Michael Hanzman of Ackerman Link & Sartory, who didn't explain exactly how "reasonable" translates in dollar terms, in his opinion. His West Palm Beach firm represented investors in the case.
“This is not a pro bono case,” Hanzman says.
Earlier related coverage:
ABAJournal.com: "2 Fla. Lawyers Charged in Alleged $800M Ponzi Scheme; Colleagues Stunned"
ABAJournal.com: "Jail Isn’t End of SEC Saga for Convicted Lawyer in $1B ‘Ponzi Scheme’"