Lloyd’s Must Pay Alleged Swindler Stanford’s Legal Fees, Court Says

March 16, 2010

A federal appeals court said Monday insurer Lloyd’s of London must pay claims related to alleged swindler Allen Stanford’s defense.

Stanford, his former chief investment officer Laura Holt, and former accounting executives Gilbert Lopez and Mark Kuhrt sued Lloyd’s after the firm stopped providing coverage under a directors and officers policy last year, citing a money laundering exclusion.

But U.S. District Judge David Hittner in Houston ruled in January that Lloyd’s must pay costs and expenses that had been submitted by Stanford and his attorneys. Lloyd’s appealed that decision to the U.S. Court of Appeals for the Fifth Circuit in New Orleans.

The appeals court Monday upheld Hittner’s ruling but also sent the case back to the district court for additional arguments on the coverage question. Lloyd’s must pay in the meantime, the court said in a 24-page ruling.

“The underwriters are enjoined from refusing to advance defense costs as provided for in the D&O policy unless and until a court ‘determines in fact’ by clear and convincing evidence …” that money laundering occurred, the ruling said.

Stanford, Holt, Lopez, and Kuhrt face criminal and civil charges for for defrauding investors in a $7 billion Ponzi scheme centered around certificates of deposit issued by Stanford’s Antiguan bank.

They have denied any wrongdoing. Stanford, 59, is waiting in a Houston jail for his January 2011 trial.

The case is Laura Pendergest-Holt, R. Allen Stanford, Gilbert Lopez and Mark Kuhrt v Certain Underwriters at Lloyd’s of London and Arch Specialty Insurance Co, U.S. Court of Appeals for the Fifth Circuit, No. 10-20069.

(Reporting by Anna Driver in Houston; Editing by Richard Chang)

Topics USA Excess Surplus Lloyd's

Was this article valuable?

Here are more articles you may enjoy.

Latest Comments

  • March 18, 2010 at 10:19 am
    Judie Bronsther says:
    Lloyd's should make sure that the legal bills are reasonable and that the law firm is not deviating from acceptable billing patterns and practices. While the fees and expenses... read more
  • March 17, 2010 at 10:58 am
    Han Valen says:
    Hmmmm: Lloyds is attempting to exlude in defense of allegations, not defense or payment of any fines of proven actions. That is to say, he hasn't been found guilty of the swin... read more
  • March 16, 2010 at 5:56 am
    anon the mouse says:
    Could this be a developing case of unintentional education when the attorneys are subjected to fee charge backs? If so will the attorneys in question be able to apply those ch... read more

Add a CommentSee All Comments (4)Add a Comment

Your email address will not be published. Required fields are marked *

*

More News
More News Features