Thornburg Mortgage gets Maryland lawyer Sher as trustee

* Baltimore lawyer names trustee

* Government said resources may have been misappropriated

By Jonathan Stempel

NEW YORK, Oct 30 (Reuters) - A Maryland bankruptcy judge appointed the lawyer Joel Sher as trustee to oversee the liquidation of the former Thornburg Mortgage Inc (THMRQ.PK), which had been a large provider of "jumbo" home loans prior to its May 1 bankruptcy.

Sher's appointment was approved Wednesday by U.S. Bankruptcy Judge Duncan Keir. The U.S. Department of Justice sought a trustee after learning that directors might have let former top Thornburg executives misappropriate company resources to launch a start-up venture, SAF Financial Inc.

At an Oct 7 hearing, then-president Anne-Drue Anderson said she allowed former Chief Executive Larry Goldstone and Chief Financial Officer Clarence Simmons to remain on staff after their Sept. 15 resignations to smooth the transition.

She said, though that she did not know that "virtually every employee" had been engaged in the SAF venture.

According to a Monday regulatory filing, Anderson and four other directors resigned, effective upon the appointment of a Chapter 11 trustee. TMST Inc, as Thornburg is now known, opposed the naming of a trustee, and had said that remaining staff have no conflicts of interest.

Sher is chairman of the Baltimore law firm Shapiro Sher Guinot & Sandler and runs its bankruptcy practice. His bankruptcy cases have included retailers Just for Feet Inc and Merry-Go-Round Enterprises Inc, Fieldstone Mortgage Co, and the real estate investment trust Luminent Mortgage Capital Inc.

Thornburg is one of the largest casualties of the nation's housing slump and credit crisis, with $24.4 billion of assets and $24.7 billion of debts according to its bankruptcy filing.

The Santa Fe, New Mexico-based lender once specialized in making home loans larger than $417,000 to borrowers with good credit, but collapsed following margin calls and a plunge in the value of mortgages it held.

Shares of Thornburg fell a fraction of a cent to 1.6 cents in afternoon trading on the Pink Sheets.

The case is In re: TMST Inc, U.S. Bankruptcy Court, District of Maryland, No. 09-17787. (Reporting by Jonathan Stempel; editing by Gunna Dickson)