The bankruptcy case of Thornburg Mortgage has already involved an anonymous letter, allegedly stolen laptops, lawsuits against the company’s former top executives and law firms bowing out of the case for various reasons. Thursday brought a new development: a suit, brought by the U.S. Trustee now handling matters for the debtor, charging Orrick, Herrington & Sutcliffe partner Karen Dempsey with being part of an alleged conspiracy to defraud Thornburg and divert the company’s money to a new entity started by ex-Thornburg management.
The allegations are too numerous to spell out in full here (the complaint is available for download below), but the gist is this: The trustee, Joel Sher of Shapiro, Sher, Guinot & Sandler, charges four former Thornburg executives with using various means to send millions of dollars from the debtor company to their new company, SAF Financial, according to court records. Orrick’s Dempsey allegedly helped the former execs along the way by, among other things, advising them on how to set up SAF and amend the Thornburg management agreement in a way that allowed for the payment of management fees and bonuses from Thornburg to the executives on a faster timetable — and outside of bankruptcy court. The executives are separately charged with stealing confidential Thornburg property and instructing some Thornburg employees to do work for SAF, court records show. (Sher did not respond to two calls seeking comment.)
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