Efforts to settle sex abuse claims against Jeffrey Epstein’s estate are being thwarted by the attorney general of the US Virgin Islands, lawyers for the disgraced late financier have claimed in court.

The dispute arises from efforts by the territory’s attorney general, Denise George, to claim that Epstein, who owned two islands in the Virgin Islands and where monetary claims on his estate are focused, fraudulently obtained benefits related to a banking licence as part of his alleged criminal enterprise.

In court documents, George said she planned to name the disgraced financier’s lawyers as co-defendants and fight his estate’s involvement in creating a victims’ compensation fund.

In July last year, Epstein was arrested on fresh federal sex trafficking and conspiracy charges. He had previously pleaded guilty in 2008 to a Florida state prostitution charge and completed a 13-month jail sentence. Epstein pleaded not guilty to the new allegations but died by suicide in a New York jail cell in August.

His death has triggered a wide-ranging investigation into his associates and members of his powerful social circle and also many victim claims for compensation.

Bennet Moskowitz, who is representing Epstein’s estate, claimed that liens against the estate have left him unable to release money from Epstein’s $570m fortune to a victim’s compensation fund.

“The attorney general for the Virgin Islands has decided for whatever reason to impede the program,” Moskowitz said at the hearing in Manhattan federal court.

But George countered that claim, saying she was in fact looking out for victims who may yet come forward.

“The attorney general’s office has opposed the approval of the fund as currently proposed because it lacks fairness, accountability, impartiality and sensitivity to victims at a level they deserve,” George said in the statement.

“Further, victims who have not yet come forward or who may not wish to use the fund must be supported and protected, with funds for counseling and for their claims, too,” she said, adding: “There must be full accountability, not only of the estate, but those who participated in, facilitated, and covered up Epstein’s crimes.”

Last month, George brought charges against Epstein’s estate and alleged that his lawyers, Darren Indyke and Richard Kahn, may have been part of Epstein’s alleged fraud. George also put claims on Epstein’s two islands.

Epstein named Indyke and Kahn as his executors to a will he modified so that it would be executed in the Caribbean territory two days before he was found dead in a Manhattan jail cell on 10 August.

In November, it was reported that Epstein’s estate had asked the courts to allow a voluntary resolution program for the late sex offender’s accusers overseen by Ken Feinberg, the settlement’s expert who oversaw claims from victims of the 9/11 terrorist attacks, the Catholic church’s sex abuse scandals, and the BP-Blue Water Horizon oil spill.

But lawyers for several victims have argued that a victims fund would maintain the shroud of secrecy over Epstein’s alleged crimes and prevent the release of any new information while minimizing the threat of large jury awards from individual legal actions.