Stanford case grows more complex

United States District Judge David Hittner has given the nod for a review of documents related to allegations that lawyers of disgraced financier Allen Stanford were engaged in insurance fraud.

Hittner is handling the criminal case against Stanford but his order, released Monday, relates to a separate insurance coverage dispute that Stanford and underwriters at Lloyd's of London and Arch Specialty Insurance Company are litigating in the same court.

The order lets the underwriters review documents filed under seal.

According to court papers, the underwriters learned that Michael Essmyer, who is Stanford's co-counsel in the criminal case, alleged that lead counsel Robert Bennett and his Bennett-Nguyen Joint Venture group "may have engaged in insurance fraud" in submitting a fee application.

Bennett denied engaging in insurance fraud, according to the papers, which were signed by him, Essmyer and a lawyer for the insurers.

It follows the June 9 request by Laura Pendergest-Holt, a former Stanford Financial chief investment officer, that her trial be separated from that of her former boss.

Stanford was arrested in June 2009 and accused of running a US$7-billion Ponzi scheme focused on his Stanford Financial Group's fraudulent sale of certificates of deposit issued by his Antigua-based Stanford International Bank.

Stanford and his co-accused have denied the charges and pleaded not guilty. Jury selection for their trial is set for January 24, 2011.

CMC