Cricket News

Stanford loses use of Lloyds policy to pay lawyers

* Stanford needed policy to pay lawyers for his defense

* Findings not for use in criminal or civil case -judge

NEW YORK, Oct 13 (Reuters) - Accused swindler Allen Stanford may not use $100 million in a Lloyd’s of London insurance policy to pay the lawyers defending him on charges of running a $7 billion fraud, a U.S. judge in Texas ruled on Wednesday.

Stanford’s criminal trial is scheduled for January on charges that he and other top executives of Houston-based Stanford Financial Group swindled investors who bought certificates of deposit issued by Stanford International Bank in Antigua.

A ruling by U.S. District Judge Nancy Atlas said that lawyers for Lloyds had proven at a trial in August that it was likely that Stanford had committed money laundering. Stanford and his co-defendants deny any wrongdoing.

The court “concludes as to each plaintiff that the policy’s money laundering exclusion applies to justify underwriters’ denial of insurance coverage at this time,” Atlas’s written ruling in Houston federal court said.

She said that the findings “are neither final findings of fact nor conclusions of law” for use in the criminal case or the civil case by the U.S. Securities and Exchange Commission against Stanford and three other executives.

The executives had argued that they could not afford to pay their lawyers because their assets were frozen when the SEC charged them in February 2009.

The Lloyds underwriters of the directors and officers policy denied coverage after one defendant, former Stanford Chief Financial Officer James Davis, pleaded guilty to some of the charges last year.

The cases are Laura Pendergest-Holt et al v Certain Underwriters at Lloyd’s of London, U.S. District Court for the Southern District of Texas, No. 09-3712 and U.S. v Stanford 09-342 and SEC v Stanford International Bank 09-298. (Reporting by Grant McCool, editing by Gerald E. McCormick)