Millions missing in funds controlled by L.A. federal judge
At least $5 million, and perhaps 10 times that amount, appears to be unaccounted for in funds entrusted to U.S. District Court Judge Manuel L. Real, and the rival Filipino claimants to the account want the controversy-plagued Los Angeles judge to provide full details of what happened with their money.
In a protracted legal action brought by victims of late Philippines dictator Ferdinand Marcos, Real had been given control over about $34 million in assets seized from a Swiss bank account and a Panamanian shell company while the Manila government, the Philippines National Bank and individuals abused by Marcos pressed their claims to rightful ownership of the funds in U.S. courts.
But the U.S. Supreme Court last year sent the battle to Philippines' courts to resolve, and it ordered Real to remit the entrusted funds to a Merrill, Lynch, Pierce, Fenner and Smith Inc., account for safekeeping while the ownership issues are resolved.
Real, 85, who has been privately reprimanded by the judicial council of the U.S. 9th Circuit Court of Appeals for misconduct and been stripped of responsibility for at least eight cases, has so far refused to provide more than a perplexing half-page list of account activity that leaves unclear whether or how much interest was earned on the funds over nearly a decade. His account mentions a $63,000 payment for trustees fees and nearly $5 million in "other disbursements." It also alludes to $98 million in purchases and $118 million in sales, suggesting the account earned at least $20 million in transactions.
Real "doesn't comment on things," his clerk, William Horrell, said when The Times called the judge's chambers for his reaction to demands that he explain what happened to the plaintiffs' money.
On behalf of the Philippine National Bank and other claimants, attorneys in New York, Washington and Honolulu have appealed to the 9th Circuit to demand a detailed report on the fund activity since 2000 because "we are concerned Judge Real's purported accounting of the assets was incomplete and failed to provide us with adequate certainty that the right amount of assets was returned to Merrill Lynch," said Kenneth S. Geller, an attorney with Mayer Brown in New York, which is representing the bank.
"There could be as much as $50 [million] or $60 million that hasn't been returned," Geller said of the absence of any discernible records. While court escrow funds are usually invested conservatively, Geller noted, "we don't know if it was invested in 1% interest or aggressively traded and earned a lot of money."
-- Carol J. Williams