White-Collar Crime

Receiver Seeks Clawback of Legal Fees Paid to Paul Hastings & Fulbright Firms


Asked by a federal judge in Utah to recover money on behalf of investors allegedly fleeced by a claimed Ponzi scheme operator, Val Southwick, a receiver has focused on two major law firms.

Contending that money from the Ponzi scheme was used to fund legal defense fees, the receiver filed suit last week in U.S. District Court in Utah seeking a clawback of attorney fees paid to Fulbright & Jaworski and Paul Hastings Janofsky & Walker, according to the National Law Journal. Among the allegations made are that the money was fraudulently transferred by Southwick’s company, VesCor, and unjust enrichment.

The receiver is Robert Wing of Prince Yeates & Geldzahler in Salt Lake City. He is also seeking an accounting from the law firms. At least $3 million apparently is at issue in the litigation.

Paul Hastings says in a written statement that “the complaint demonstrates an inaccurate understanding of the facts.” The Fulbright firm declines to comment.

Southwick was convicted in state court in Utah of nine counts of securities fraud in 2008. He and five VesCor entities are defendants in a civil fraud case filed in 2008 by the U.S. Securities and Exchange Commission.

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