Former govt counsel urges stop to ‘looting’ of Fund by lawyers

In a letter to Faris filed in federal court on Friday, attorney Mary E. Flanagan asked the judge to closely examine the reasonableness of all Fund monies proposed to be paid to the various professionals now involved in the case.

Flanagan, now based in Florida, used to serve in the Office of the Attorney General, the Office of the Public Auditor, and as legal counsel for a former governor. She says she is receiving benefits as the surviving spouse of a deceased member of the defined benefits plan of the Fund.

She pointed out that, as Faris himself had stated, the treatment of retirees has been shameful over many year. “Of course the Bankruptcy Court cannot right all of these wrongs. The court can, however, endeavor to avoid compounding past mistakes by allowing more virtual looting of the Fund,” she said.

As former CNMI attorney general Richard Weil and David Price have stated in their recent letters to Faris, Flanagan said that initiating the bankruptcy action was ill-advised and questionable as it has cost the Fund a significant amount of money at a time when every dollar matters.

On particular note, Flanagan said, the selection “process” for the Boston-based law firm of Brown and Rudnick is suspect and may well have been manipulated.

“I understand that you now have before you a request for $1.2 million in various additional professional fees, a large portion of which is claimed by the Brown and Rudnick firm,” she said.

Attorneys’ fees and expenses being demanded by the lawyers involved in the Chapter 11 case have reached a total of $844,650.93, covering the period from April 17, 2012 to June 13, 2012.

Of that amount, the Brown and Rudnick law firm is demanding $719,293.50 for professional services plus $46,644.32 in reimbursement for expenses, for a total of $765,937.82.

Flanagan said that leaving aside the wisdom and fairness of the original agreement for the Fund to pay Brown and Rudnick $750,000 (“and the secretive circumstances surrounding its award”), one must ask on what basis they can possibly justify even more money.

“For what? Many of their actions seem solely motivated by the desire to run up fees,” she said.

Flanagan cited as examples the filing of multiple actions against other CNMI government agencies for nonpayment of employer contributions, and transferring the Superior Court judgment to the Federal Bankruptcy Court for collection, even before the Bankruptcy Court ruled on its jurisdiction.

The lawyer also cited the law firm’s filing in the last few days, requesting the Bankruptcy Court to approve the transfer of real property in San Vicente.

“Why this being done now, after the court has indicated its intent to dismiss the bankruptcy action for lack of jurisdiction?” she asked.

Flanagan said that since the retainer agreement with the law firm was negotiated in secrecy without any input from any other governmental agency or the Commonwealth Retirees Association, the court should closely scrutinize an itemized breakdown of all of the law firm’s claimed costs and expenses.

“The court and the retirees need to know exactly what the Fund is being asked for pay for,” she added.

Flanagan pointed out that $1.2 million would pay 200 retirees under the defined benefit plan an annual minimum of $6,000 for a year.

By Ferdie de la Torre
Reporter