Judge: Insurers Don't Have to Cover Allen Stanford's Defense Bills
Here's an idea by financier R. Allen Stanford: obtain legal defense insurance, swindle investors out of $7 billion and if anything goes wrong, pay your attorneys with your $100 million insurance policy. Sounds like a plan, right?
Perhaps you're thinking that your company should get it's own insurance policy so that your in-house work would be paid for by insurance in the case of bad acts by the company or its executives.
Just one problem, Lloyd's of London, who insured the directors and officers of the Stanford Financial Group have denied the claim and a judge has upheld their rejection. Stanford, who is behind bars, had his creative insurance plan blocked when a federal judge ruled that there was a substantial likelihood that Stanford "knowingly committed acts of money laundering." Stanford was accused of running a $7 billion Ponzi scheme where the company issued certificates of deposit from an offshore bank he controlled.
Stanford, 60 and several other executives of the Stanford Financial Group have been trying to get Lloyd's to pay for their legal defense since February 2009 when the Securities and Exchange Commission sued the company. Lloyd's flatly rejected the claim, The New York Times reports. "The court does not reach the issue of whether the evidence supports a finding that Stanford personally engaged in criminal conduct," Judge Atlas wrote. Stanford's criminal trial begins January 24, 2011.
That leaves Allen Stanford in a precarious situation. He has been through a number of attorneys since his legal problems began, at once point being represented by the public defender. However, despite being broke and held without bail, due to being considered a flight risk, Stanford has retained Houston attorney Robert S. Bennett. Bennett said that he is naturally concerned about the money, but hoped that the government would pay at least as much as the fees that Lloyd's would have covered.
That's a pretty bold bet on the part of Bennett, but he remains committed to the cause.
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