‘$610K of BoS’ $1M insurance policy spent by Fennell’s attorneys’

The attorneys of former Bank of Saipan receiver Randall T. Fennell had already expended $610,000 of the $1 million insurance policy paid for by BoS, according to the bank’s current receiver Antonio S. Muna.

In court papers, Muna disclosed that in early November 2005, he received a letter from the insurer’s attorneys, indicating that through Sept. 30, 2005, Fennell’s attorneys had expended the $610,000 towards the receiver’s $1 million insurance policy.

Attorney S. Joshua Berger, counsel for Muna, said with the amount of court filings in the last two months, it is expected that the fees for Fennell’s attorneys are more likely in the $800,000 range.

Berger said this is very distressing to his client since as a co-insured on this insurance policy, there would appear to be very little to protect Muna when he will be sued.

This insurance policy paid for by BoS the past three years, is also to protect Muna as a co-insured, said Berger in the receiver’s pleadings filed in the CNMI Supreme Court in response to the BoS’ appeal from a trial court’s order regarding spending cap issue.

“Fennell’s attorneys are eroding this insurance policy at an alarming rate,” the lawyer stated.

Muna wants that the receivership placed on BoS should be terminated now and that the dispute with Fennell should be handled in a separate civil action.

Berger said Muna joined the Bank of Saipan Inc. in its appeal because he believes that the receivership should be terminated and that the bank should be allowed to prosper, unburdened by the taint and expense of the receivership.

In October 2005, Superior Court Associate Judge Juan T. Lizama issued an order, stating that BoS is not implementing reasonable cost controls in connection with the bank’s board of directors’ lawsuit against Fennell.

The judge ordered that the bank and its board, officers, agents, employees and attorneys, shall not expend any additional corporate funds in support of the board’s lawsuit against Fennell.

He gave the bank 45 days to submit to the court a plan detailing how the costs will be controlled.

The Bank of Saipan Inc. appealed the spending cap order.

Fennell and his counsel filed motions with the high court to either confirm or declare their status as appellee, intervene, or grant them amicus curiae status.

Last Wednesday, CNMI Supreme Court Associate Justice Alexandro C. Castro denied the request of Fennell and his counsel to declare them as parties in the appeal.

In April 2002, the Commerce secretary shut down BoS, concluding that the bank was insufficiently liquid to continue to meet depositors’ demands.

The bank was put into receivership and Fennell was appointed receiver. He served as receiver from April 30, 2002 until his discharge on Sept. 27, 2002.