5th Circuit Stays Judge's Order That Insurer Must Pay Stanford's Lawyers
Staying a federal district court’s order that a renowned insurance company must pay for R. Allen Stanford’s defense in a criminal case, a federal appeals court today scheduled oral arguments on the issue later this month.
Last week, a federal judge in Houston ruled that Lloyd’s of London had a duty to defend Stanford on charges related to his alleged operation of a $7 billion Ponzi scheme, under his company’s policies of directors and officers liability insurance. However, the New Orleans-based 5th U.S. Circuit Court of Appeals held today that further consideration of the issue is needed before Lloyd’s is required to issue a check to Stanford’s defense lawyers.
Lloyd’s argues that a broadly worded money-laundering exclusion from coverage in its D&O policy for Stanford Financial Group excuses the insurer from having to pay Stanford’s lawyers, according to the Houston Chronicle.
Earlier, Senior U.S. District Judge David Hittner held that Lloyd’s must defend Stanford and other company executives, because there has been no court finding that they, in fact, participated in money-laundering. The insurer had determined that the exclusion applied based on information from civil investigations and a guilty plea—albeit not to money-laundering—by a former Stanford chief financial officer.
Related coverage:
ABAJournal.com: “Judge Says Lloyd’s Must Defend Allen Stanford in Alleged $7B Scheme, Under D&O Policies”
