- Judge Scrutinizes Legal Fees in Ponzi Case; Lawyers Have Received More Than Victims, So Far
Judge Scrutinizes Legal Fees in Ponzi Case; Lawyers Have Received More Than Victims, So Far
Posted Aug 26, 2011 3:25 PM CDT
By Rachel M. Zahorsky
Amid concern that lawyers have so far collected more than triple the amount paid to victims, an appellate judge has limited several firms' fee awards for work on the receivership case connected to WexTrust Capital. And it's not the first time he's spoken out on the issue.
Judge Denny Chin of the New York City-based 2nd U.S. Circuit Court of Appeals said he was troubled Wednesday that the WexTrust Capital estate has paid more than $15.5 million to law firms—primarily to Dewey & Leboeuf, the former firm of court-appointed WexTrust receiver Timothy Coleman-—so far, "more than three times the approximately $5 million paid to the victims," the Am Law Daily reports.
Chin also raised concerns about the proposed hiring of Kasowitz Benson Torres & Friedman as insurance coverage counsel on the case and rejected a settlement with a Chicago law firm accused of malpractice by the WexTrust estate.
"Kasowitz Benson is a terrific law firm, an expensive law firm," Chin said at an August 3rd hearing, according to the Virginian-Pilot, the Am Law Daily reports. Then he asked, "Do we need Kasowitz Benson here?"
WexTrust, a former Chicago-based real estate investment firm, collapsed in 2008 amid federal charges against two executives for running a $100 million Ponzi scheme that defrauded 1,200 primarily Orthodox Jewish investors.