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Eduardo Li wins lawsuit against insurance company over defense costs in FIFA corruption case

April 27, 2016

Former Costa Rica football official Eduardo Li won a key court decision Wednesday against insurance company Lloyd’s of London in a dispute over his defense costs in the FIFA corruption investigation. A U.S. district judge ruled that the British insurer would have to cover all legal expenses in the FIFA case incurred by the former president of the Costa Rican Football Federation.

After Li was indicted along with top FIFA officials last May, he sent a request to Lloyd’s of London to pay for his legal costs as part of a contract that FIFA officials had with the British insurer. Lloyd’s quickly denied any obligation under the policy, arguing that its contract with Li did not cover trials in the United States, where Li would soon be extradited to face charges of money laundering and wire fraud.

In November of 2015, Li brought a lawsuit against Lloyd’s in New York. The Lloyd’s team requested the trial be dismissed, arguing that the company’s insurance agreement with FIFA officials was not intended to cover cases in the United States.

U.S. District Judge Raymond Dearie ruled Wednesday that the insurer’s request was “lacking in merit” and sided with Li on the grounds of irreparable harm, saying Li faces “actual and imminent injury” because Lloyd’s has refuse to pay his defense costs.

The original insurance policy includes a willful misconduct exclusion clause that says defense costs will be covered as long as it remains undetermined whether or not the client had wrongful intent. Since Li has yet to be tried for his alleged misconduct, Dearie said the policy mandates that Lloyd’s immediately reimburse the policyholder.

However, if Li, who is currently under house arrest in New York, eventually goes to trial and is found guilty, he would have to reimburse Lloyd’s.

For now, it’s an important financial victory for the Costa Rican, who was freed from a New York detention center on bail of $5 million in early March.

This uncommon procedural development comes two weeks after Judge Dearie postponed setting a trial date for Li and seven other defendants facing corruption charges in the U.S. District Court for the Eastern District of New York. Li’s legal team had proposed delaying the trial, arguing, among other points, that the defense needed time to go through the estimated 700 million to 900 million pages of evidence. The judge said the question of a trial date would be revisted after June 30, when the bulk of evidence is expected to be available to the defense.

As part of the conditions of his bail release, Li must wear an electronic ankle bracelet and submit to 24-hour video surveillance. He also had to surrender his passports to U.S. authorities.

In a potential trial, Li could face 19 charges involving money laundering and wire fraud after being named in a pair of indictments from the U.S. Department of Justice. He has pleaded not guilty to all charges.

U.S. prosecutors have accused 40 officials and marketing executives of asking for and receiving tens of millions of dollars in bribes and kickbacks in relation to the FIFA corruption sting.

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