After Paying $6 Million, Lloyd’s Balks at More for Stanford’s Legal Teams

May 28, 2010

The insurance company paying jailed Texas financier R. Allen Stanford’s legal bills said this week it is tired of supporting his revolving door of attorneys and already has spent more than $6 million on lawyers from 10 firms to defend him from allegations that he orchestrated a massive Ponzi scheme.

At a hearing in federal court in a lawsuit related to the payment of legal fees, attorneys for insurer Lloyd’s of London told U.S. District Judge Nancy Atlas the company refuses to pay for Stanford’s newest criminal defense team — his fourth since being indicted nearly a year ago on charges alleging he defrauded investors out of some $7 billion.

Barry Chasnoff, an attorney for Lloyd’s, said the insurer had concerns that one of Stanford’s new attorneys, who was approved just last month, had already asked to be released because of differences with Stanford and the other new attorney on the case.

Several of Stanford’s previous attorneys have said they left the case because the financier was difficult to work with. At a hearing on Tuesday, Stanford represented himself because his attorneys in the lawsuit stopped working for him due to a “conflict of interest.”

Stanford told Atlas he has been taken advantage of, has never seen any of the bills submitted by his prior attorneys and doesn’t know what work many of them actually did.

“I think it’s an obscene amount of money that’s been spent on what has been produced,” Stanford said.

Atlas set a June 3 hearing to detail how the $6 million in legal fees for civil and criminal cases have been spent.

“We are going to get to the bottom of why so much money is being spent in Mr. Stanford’s defense,” Atlas said.

Stanford and three executives of his now defunct Houston-based Stanford Financial Group face trial in January on charges including money laundering, wire and mail fraud.

Their legal fees are being paid by an insurance policy from Lloyd’s. But the insurer says the policy doesn’t pay on charges of money laundering. An appeals court in March said a lower court must determine if money laundering was committed in order for the policy to be invalid.

The lawsuit over the payment of legal fees was filed by Stanford and the executives against the insurer and is being handled by Atlas, who is holding an evidence hearing on Aug. 24 in which the insurer will have to prove Stanford and the executives committed money laundering.

U.S. District Judge David Hittner in Houston is overseeing the criminal case against Stanford.

During Tuesday’s hearing, Stanford asked Atlas if he could help him with his request to be freed on bond. Stanford has been held without bond since his June indictment, deemed a serious flight risk by Hittner. Stanford has a third request before Hittner asking for bond. The two previous requests have been denied.

“I never had any intention of fleeing,” Stanford said. “I can win this case. I didn’t run a Ponzi scheme.”

Since being jailed, Stanford has had a series of health problems. He said another inmate beat him and left him unable to see out of his right eye.

Atlas said she would ask Hittner to reconsider his bond decision.

Stanford and the three executives are accused of orchestrating a colossal pyramid scheme by advising clients to invest more than $7 billion in certificates of deposit from the Stanford International Bank in the Caribbean island of Antigua and then misusing the money, in part to pay for Stanford’s lavish lifestyle.

Stanford and the executives have pleaded not guilty.

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