Aug. 5 (Bloomberg) -- Financier R. Allen Stanford, indicted on charges of running a $7 billion fraud, asked a federal judge in Houston to let his new attorneys make a request for access to his frozen assets to pay legal fees.

Stanford said last week that he was replacing lead defense lawyer Dick DeGuerin with Robert Luskin of Washington’s Patton Boggs LLP. Stanford yesterday told U.S. District Judge David Hittner that Luskin’s representation was contingent upon success in winning access to some of his assets frozen by court order.

“If the court does not consent to the terms,” Stanford said, Patton Boggs and attorneys from the Houston-based firm of Sydow & McDonald LLP “have agreed that Patton Boggs shall not otherwise enter an appearance in this case.”

Sydow & McDonald is acting as local counsel for Stanford in the criminal case, the financier said. Stanford faces a 21-count indictment accusing him and four other people of conspiring to defraud investors through the sale of certificates of deposit issued by Antigua-based Stanford International Bank Ltd.

In a lawsuit filed by the U.S. Securities and Exchange Commission in February, a federal judge in Dallas froze the financier’s personal and business assets and placed them under the control of receiver Ralph Janvey.

Stanford has denied all civil and criminal allegations of wrongdoing.

Receiver’s Fees

In a separate filing yesterday in the SEC case, Janvey requested payment of $7.6 million in legal fees and expenses to cover his work as receiver from April 13 to May 30. The request follows one for $20 million to pay for Janvey’s first eight weeks on the Stanford case.

Janvey said the 14 accounting and legal firms working with him continue to discount their services by 20 percent out of concerns for the victims of Stanford’s alleged fraud. That has resulted in a $6.7 million reduction in total charges during the receivership’s first 15 weeks, he said.

Closing some Stanford operations and gaining better information has helped him reduce weekly charges by 55 percent compared with his initial billings, Janvey said.

The SEC and an investors’ advocate objected to Janvey’s earlier fee request, calling it excessive because of the minimal recovery anticipated for Stanford’s victims. Rose Romero, head of the SEC’s Fort Worth, Texas, office, told Hittner at a hearing last week that Janvey’s billings equaled about $4,500 per hour.

Ian McCaleb, a Justice Department spokesman, and Kevin Callahan, an SEC spokesman, declined to comment. Carrie Blewitt, Stanford’s spokeswoman, didn’t immediately return a message seeking comment after regular business hours yesterday.

Insurance Coverage

DeGuerin and lawyers representing Stanford in the civil case have argued for access to the frozen funds and the ability to tap Lloyds of London directors’ and officers’ insurance coverage to pay legal costs.

U.S. District Judge David Godbey in Dallas has refused to give Stanford access to his funds unless he can prove the money he seeks, $10 million, isn’t tainted by fraud. The judge hasn’t ruled on Stanford’s request to use the insurance coverage.

“It’s an outrage that the receiver has blocked every effort for Allen Stanford’s lawyers to be paid even a penny, whether from Stanford’s own funds or from the D&O insurance policy, while he destroys the value of the Stanford companies and pays himself and his lawyers and accountants to do it,’’ DeGuerin said in an e-mail.

Couldn’t Be Paid

DeGuerin told the court in a July 31 filing he sought to be relieved as Stanford’s counsel because he couldn’t obtain adequate assurances that he would be paid for his work.

Stanford told DeGuerin on July 31 that he was being replaced with Patton Boggs. DeGuerin visited Stanford in jail the day before to say he would withdraw from the case without immediate pledge that he’d be paid.

“I understand this situation is unacceptable to you,” Stanford said in a handwritten letter to DeGuerin, which was attached to a motion that was sealed after it was filed yesterday in federal court in Houston.

“I am very disappointed it has come to this, but my very life is at stake here and I must have a united team in the many battles that lie ahead,” Stanford told DeGuerin in the letter.

Neither Luskin, nor Sydow & McDonald partner Michael Sydow, immediately returned calls seeking comment.

Hittner said in an order earlier yesterday that he would put on hold DeGuerin’s withdrawal request until new lawyers appeared for Stanford.

The criminal case is U.S. v. Stanford, 09cr342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank Ltd., 09cv298, U.S. District Court, Northern District of Texas (Dallas).

To contact the reporters on this story: Andrew M. Harris in Chicago at aharris16@bloomberg.net; Laurel Brubaker Calkins in Houston at laurel@calkins.us.com.

Last Updated: August 5, 2009 00:01 EDT