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August 13, 2009

The Stanford D&O Policy

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This earlier post noted that alleged Ponzi-schemer R. Allen Stanford has been denied use of proceeds of a director's and officer's insurance policy to pay his defense costs because of claims made on that policy by the receiver appointed in the SEC's civil lawsuit against Stanford Financial Group.

Inasmuch as Stanford's personal assets have been frozen in that civil lawsuit, the lack of insurance coverage under the D&O policy has effectively prevented Stanford from finalizing arrangements for his defense in the criminal case. That state of affairs has certainly contributed to this unfortunate situation.

Thus, the issue of who is entitled to the proceeds of the Stanford D&O policy is extremely important, and Kevin LaCroix over at The D&O Diary has done this excellent analysis of the issues involved. It looks to me as if the Stanford officers have the better case than the receiver to the proceeds, but what do I know?

At any rate, if I am right, then Stanford and other Stanford Financial Group officers are being severely damaged as a result of the insurers declining to pay claims under the policy pending resolution of the receiver's claim to the policy proceeds.

It sure doesn't look as if anyone in the judiciary cares about that much.

Posted by Tom at August 13, 2009 12:01 AM |

Comments

Tom,

Assuming "Sir" Allen has to avail himself of the services of a public defender in this case, is there (in your mind) a legitimate argument that a public defender would not be capable of representing "Sir" Allen in a fashion that would ensure his rights are respected?

There is an interesting side story concerning the actions of the Marshals in seizing Laura's files and records pursuant to the civil court order while she was in custody.

Could there also be an argument made that defendants forced to avail themselves of the services of a public defender could be deprived of their Constitutional rights because counsel assigned to the case was incapable of mounting a reasonably sophisticated defense, given the exigent circumstances?

Posted by: cmilford Author Profile Page at August 12, 2009 9:33 PM

Charles, being forced to retain a public defender is not a deprivation of Constitutional rights.

However, having the government mount a coordinated strategy to deprive a defendant from hiring counsel of his own choice (who would clearly mount a better defense than a public defender) just might be.

Posted by: Tom K. Author Profile Page at August 13, 2009 6:56 AM

I find it difficult to be sympathetic towards these corporate types because normally they have been funding their enemies! Lenin reportedly once said that the capitalists will supply the rope for their own hanging. These individuals have more often than not backed Democratic Party and "moderate" Republican candidates. They have nobody to blame but themselves.

Posted by: David Thomson Author Profile Page at August 13, 2009 7:21 AM

Posted by: Mike Author Profile Page at August 13, 2009 2:54 PM

David,

Not every story is a Democrat vs Republican story. Allen Stanford embraced both political parties equally. He was a big donor to Democrats and gave generously to finance roundtables at the 2008 Democratic National Convention. Joe Biden's son had business connections to Stanford. To me, that sounds like backing Democrats rather solidly.

By the way, I like how you seem to equate "capitalists" and Republicans. I guess the counter would be to equate socialists with Democrats. Sounds about right to me.

Posted by: cmilford Author Profile Page at August 13, 2009 10:14 PM

Thanks Tom for your effort. I am expecting such informative aticles in future also.

Posted by: Data recovery Author Profile Page at August 27, 2009 4:27 AM

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