HOUSTON — Jailed Texas financier R. Allen Stanford and two former executives charged in a massive Ponzi scheme will be unable to rely on an insurance policy to cover mounting legal bills, a federal judge ruled yesterday.
Lloyd’s of London has balked at funding the defense of the three men on charges that they bilked investors out of $7 billion, saying the policy doesn’t cover money laundering charges. That is one of the many counts Stanford, Gilbert Lopez, and Mark Kuhrt face in a federal indictment.
As of last month, the insurer had paid more than $11.2 million in defense of the men in criminal and civil cases, with more than $8.2 million going to Stanford. The men say they can’t pay their legal bills because their assets have been confiscated.
Ruling in favor of Lloyd’s, US District Judge Nancy Atlas said that the insurer had proved the substantial likelihood that “Stanford knowingly committed acts of Money Laundering . . .’’
But Atlas warned that her findings applied only to the insurance case. Atlas did not address whether “evidence supports a finding that Stanford personally engaged in criminal conduct.’’ That means that the findings are not intended for use in the criminal and civil cases, Atlas said.
Bob Bennett, Stanford’s attorney, said he was disappointed but not surprised.
Stanford does not plan to appeal the ruling, Bennett said. Stanford’s trial, being handled by another judge, is set to begin Jan. 24.
Besides money laundering, Stanford and his onetime colleagues face charges of wire and mail fraud.
Attorneys for Kuhrt and Lopez did not immediately return calls seeking comment.
Attorneys for Lloyd’s declined to comment.
Stanford and the former executives are accused of orchestrating a pyramid scheme by advising clients from 113 countries to invest more than $7 billion in certificates of deposit at the Stanford International Bank on Antigua.