R. Allen Stanford has been in a Texas jail since he was charged last June with conspiracy, securities fraud and money laundering for running what prosecutors say was a $7 billion Ponzi scheme. When the Securities and Exchange Commission obtained an order freezing the company's assets, Stanford could not afford to pay a defense attorney, so the federal public defender's office has been representing him.
That may change soon, Wayne State University law Prof. Peter Henning writes in the New York Times. Federal Judge David Hittner in Houston ruled that under a company insurance policy Lloyd’s of London is responsible for paying nearly $100 million for the for the defense of Stanford and other officers. Don't be surprised if the legal bills exceed even that seemingly generous pool of money. White-collar crime prosecutions and related civil actions are enormously expensive to defend, and defense costs can reach the tens of millions of dollars fairly quickly. While it was almost unknown for leading Wall Street law firms to do criminal work 30 years ago, white-collar defense is now a major source of fees and one that appears to be largely immune to the recession that has hit the firms over the past two years.