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Giant Insurance Firm Pays $120 Million for Mini-Madoff

September 8, 2016

Allen Stanford Faces Possible Life Sentence for $7 Billion FraudAllen Stanford Faces Possible Life Sentence for $7 Billion Fraud
Convicted financier R. Allen Stanford arrives at the Bob Casey Federal Courthouse for sentencing in Houston, Texas on June 14, 2012. Aaron M. Sprecher — Bloomberg via Getty Images

The insurance brokerage Willis Towers Watson (WSH) has agreed to pay $120 million to settle litigation accusing it of helping now-imprisoned Texas financier Allen Stanford run a $7.2 billion Ponzi scheme, court papers show.

The papers, in which Willis denied wrongdoing, were filed on Wednesday with the federal court in Dallas. The accord requires court approval.

In a lawsuit, investors and a court-appointed receiver for Stanford’s companies accused Willis of providing letters describing the insurance policies and touting the credentials of the swindler’s Antigua-based Stanford International Bank.

They said Willis did this with an expectation that Stanford would use the letters to lure investors into buying his bogus offshore certificates of deposit and assure them that his business was sound and their investments were safe.

The settlement is the largest in 7-1/2 years of litigation brought on behalf of roughly 18,000 former Stanford investors, Edward Snyder, a lawyer for the Official Stanford Investors Committee, said in an email on Thursday.

Overall settlements total well over $300 million, Snyder added. Many lawsuits remain pending.

In a regulatory filing, London-based Willis said it has set aside reserves to cover its settlement.

A spokesman, Josh Wozman, declined to comment on Thursday.

Stanford’s fraud was uncovered in 2009, shortly after much larger Ponzi scheme run by Bernie Madoff. Now 66, he is serving a 110-year prison term following his March 2012 conviction.