Judge says she’s staying clear of dispute over Texas financier’s legal fees

Judge staying out of Stanford legal fees dispute

HOUSTON — A federal judge said Thursday she’s not getting involved in whether an insurer should pay for jailed Texas financier R. Allen Stanford’s latest criminal defense team to defend him on charges he bilked investors out of $7 billion in a massive Ponzi scheme.

U.S. District Judge Nancy Atlas will ultimately have to decide if Stanford and three executives of his company, who have been indicted on charges including money laundering, wire and mail fraud, will have all their legal fees paid for by an insurance policy from Lloyd’s of London.

But Atlas said the issue of whether Stanford’s latest criminal defense team, lead by Houston lawyer Robert Bennett, will get paid before a final decision is made will have to be resolved between the financier and the insurer.

Lloyd’s says the policy doesn’t pay on charges of money laundering. Stanford and the executives sued the insurer over payment of legal fees. An appeals court in March said a lower court must determine if money laundering was committed in order for the policy to be invalid.

Atlas, who is handling the lawsuit, is holding an evidence hearing Aug. 24 in which Lloyd’s will have to prove Stanford and the executives of the now defunct Houston-based Stanford Financial Group committed money laundering. The criminal case against Stanford and the executives is being handled by another Houston federal judge.

On Thursday, Atlas held a hearing to receive a spending breakdown of the more than $6 million Lloyd’s has so far spent on lawyers from 10 firms to defend Stanford in criminal and civil cases.

Lloyd’s of London is refusing to approve Stanford’s newest criminal attorney, having grown tired of supporting his revolving door of lawyers, said Neel Lane, one of the insurer’s attorneys.

The courtroom Thursday was filled with more than 13 of Stanford’s past and present civil and criminal attorneys, who had been ordered by Atlas to appear.

Atlas had them tell her what they did in the case and what they charged.

She questioned whether Stanford’s current criminal defense team was bloated with too many individuals and whether it was being efficiently run.

Stanford is on his fourth criminal defense team since being indicted in June 2009. Several of Stanford’s previous attorneys have said they left the case because the financier was difficult to work with.

During the hearing, David Chesnoff, a Las Vegas attorney, told Atlas he’d been contacted by Stanford about being hired as the financier’s lead trial attorney.

Atlas asked why Chesnoff would be needed if Bennett is already serving as Stanford’s lead attorney.

“I don’t want to be flippant but I’m more well known,” said Chesnoff, whose previous clients have included Mike Tyson and magician David Copperfield, adding Bennett would stay on the case.

During the hearing, Atlas grew frustrated with Stanford and told him to stop making speeches about how conditions at the federal detention center in Houston are making it difficult for him to meet with his legal team or have access to documents he needs to review for his trial. Stanford has been jailed without bond since his indictment.

“It’s been alluded by the insurer I’ve burned through attorneys and burned through money. Nothing could be further from the truth,” Stanford said as he was about to launch into another speech.

But Atlas cut him off.

“I’m not here after three plus hours to hear speeches,” Atlas said. “If it’s in one of the many letters I’ve gotten, you need not repeat it.”

Atlas said she would make sure Stanford had better access to documents and equipment while in jail so he could prepare for trial.

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 and are set for trial in January.