The court-appointed trustee overseeing the liquidation of Thornburg Mortgage Inc. is suing a group of the company's former top executives well as its outside law firm for engaging in a "multifaceted conspiracy" to secretly use the failed lender's employees and assets to launch a new company.

Joel I. Sher, the bankruptcy trustee overseeing the liquidation of Thornburg, once the nation's second-largest independent mortgage company, said in a lawsuit filed in U.S. Bankruptcy Court in Baltimore that Thornburg's former chief executive and chief financial officer paid themselves "unauthorized" bonuses and "excessive" salaries while launching a start-up company. Then with the help of partner at a big San Francisco law firm, he says, the two engaged in a "grand scheme to hide and cover up" their actions.

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