As Charlotte attorney Ken Bell awaits a pivotal vote on his nomination for a federal judgeship, a potential hurdle before his candidacy has been removed.
Bell is President Donald Trump’s nominee to fill a judicial vacancy for the Western District of North Carolina, which stretches from Charlotte to Asheville.
He has also been overseeing the recovery of hundreds of millions of dollars from the massive ZeekRewards Ponzi scheme, one of the largest frauds of its kind in U.S. history.
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In the fall, weeks before a key vote in the U.S. Senate on Bell’s nomination, a federal watchdog agency accused Bell and the Charlotte law firm, McGuireWoods, of charging too much for their work on the Zeek case.
In court filings, the Securities and Exchange Commission challenged the amount of money Bell’s “receivership” had directly recouped. SEC attorneys also said the billings were vague, repetitive and represented a “dramatic increase” in what Bell and McGuireWoods — where Bell is a partner — agreed to be paid.
Several legal experts contacted by the Observer said the allegations should be fully investigated by the Senate before Bell’s is approved for the bench
In an earlier response filed with the courts, Bell said the recovery work has been “remarkably successful and efficient” and that the submitted fee have been reasonable and well earned.
Now, the judge overseeing the ZeekRewards case says he agrees.
The judge acknowledged that the payments represented a rate increase. But he wrote that Bell had publicly disclosed these and other fee changes, and had given the SEC 30-days notice of each billing request filed with the court.
Mullen also heaped praise on the Bell’s recovery efforts, which began in 2012. In a September status report, Bell said his receivership has collected $375 million, disbursing some $345 million to cover some of the losses of tens of thousands of victims.
“In producing the millions in settlements, the percentage of attorney’s fees charged was around 10 percent,” Mullen wrote in his order. “This is an astonishing achievement.
In challenging Bell’s requested fees, the SEC said the courts and government agencies had turned over more than $325 million to Bell’s team and that the receivership had recovered only $48 million on its own since January 2013
During that period, the SEC charged, Bell’s team had billed for $19 million, about 40 percent of what it collected.
McGuireWoods stands to receive about 60 percent of the $22 million in legal fees submitted to date.
In his order, Mullen said Bell’s relationship with the SEC has been “fraught” from the start. He said an official with the government agent “intensely pressured” Bell to hire a New York law firm to lead the recovery effort.
After requesting bids from interested firms, Bell hired his McGuireWoods.
“The relationship somewhat simmered after that and now comes to a boil,” Mullen said in his order.
“This court has held numerous conferences with (Bell) and is satisfied that he is utterly committed to recovering the maximum amount for victims with the most cost-effective means.”
Bell’s nomination to the federal bench now awaits a final vote by the U.S. Senate. He was approved by the Senature Judiciary Committee on a party line 11-10 vote in October.
Bell, a registered Republican, was a federal prosecutor for 20 years and has become of Charlotte’s most prominent white-collar defense attorneys.
He declined comment on Tuesday, as did McGuireWoods.