Due Diligence

Insurer Battles Stanford Over Legal Fees

Allen Stanford's multimillion dollar defense has hit a snag. In testimony before a federal judge in Houston, Lloyd's of London is arguing that it should be able to refuse to pay legal fees in the case against Mr. Stanford and other former executives at his firm, Gilbert Lopen Jr. and Mark Kuhrt, who are accused of participating in a $7 billion Ponzi scheme.

Lloyd's has already spent around $15 million on the case to cover expenses for a string of lawyers that Stanford has hired and then fired. Stanford has a $100 million directors' and officers' policy with Lloyd's, but the insurer says its obligation to pay is nullified by an exclusion for money laundering.

Stanford, Lopez and Kuhrt contend that Lloyd's must continue to pay because they have not been convicted.

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