×

Judge Orders Insurer to Pay Stanford Legal Bills

The lead attorney for indicted billionaire Allen Stanford said Tuesday that he can now start working on his client's defense, after a federal judge ordered Lloyd's of London to pay Stanford's legal bills.

Allen Stanford
AP
Allen Stanford

Stanford and three of his company officers have been charged with running an $8 billion Ponzi scheme. Lloyd's had initially agreed to pay for their defense under a director and officer's insurance policy, but then denied the insurance claims because of evidence that the defendants engaged in money laundering - a violation of the terms of the policy.

On Tuesday, the judge in Stanford's criminal case ordered Lloyd's to pay for the defense, expected to cost well over $20 million. There was no immediate comment from Lloyd's on the ruling, or whether it plans to appeal.

"We are now free to start working on this case without fear that Lloyds will once again be able to pull the plug on us," Stanford attorney Kent Schaffer said in an e-mail to CNBC.

The ruling also requires Lloyd's to pay the legal bills of Stanford's former Chief Investment Officer Laura Pendergest-Holt.

Her attorney, Dan Cogdell, told CNBC he was relieved by the ruling.

"The denial of coverage was improper and the Court’s Order makes that perfectly clear, Cogdell writes in an e-mail. "The Judge’s Order now allows us to properly defend our clients without fear of going into bankruptcy."

Stanford, Pendergest-Holt, and former accounting executives Gilbert Lopez and Mark Kuhrt--all covered by the Lloyd's policy--are scheduled to go on trial in January, 2011, along with former Antiguan banking regulator Leroy King, who allegedly helped hide the scam from authorities.