Insurers have been ordered to pay the legal fees of a FIFA official arrested in a wide-ranging criminal corruption case, likely opening the door for other FIFA officers and their attorneys to tap the $50 million policy for legal fees.

Eastern District Judge Raymond Dearie last week granted Eduardo Li's preliminary injunction motion to require insurers to pay his fees, totaling hundreds of thousands of dollars, under an insurance policy sold to the Fédération Internationale de Football Association, or FIFA, international soccer's governing body.

"Because the insurers have refused to advance any defense costs to Li," the judge said in Li v. Certain Underwriters at Lloyd's London, 15-cv-0609, "Li faces an actual and imminent injury and has established irreparable harm."

Dearie, who is also presiding over the FIFA criminal case, added, "The stability of the attorney-client relationship during this critical time cannot be overstated. The strong local interest in seeing that litigants before this court are appropriately represented, officers are appropriately compensated, and that criminal matters are not unnecessarily hindered cannot be ignored."

Li and about 40 other defendants have been charged with racketeering, wire fraud or money laundering conspiracies, among other offences, for an alleged scheme to enrich themselves through the corruption of international soccer.

Li, a FIFA executive committee member-elect, is accused of using his position to obtain bribes and kickbacks. He was extradited, arraigned in the Eastern District, and detained in Brooklyn until his release on bail in March.

Last summer, Li notified insurers, which had provided a directors-and-officers liability policy, of his indictment. He requested payment under the policy, which has a $50 million limit, for the cost of his defense.

The policy provides world-wide coverage for costs incurred to defend any actual or alleged wrongful acts, investigation costs and reasonable legal fees related to extradition proceedings.

In August, the insurers, including certain underwriters at Lloyd's London and Axis Specialty Europe Se, denied obligation to pay. They argued that coverage was barred by an exclusion in the policy for any damages tied to the Racketeer Influenced and Corrupt Organizations Act, or RICO.

Li filed suit in Brooklyn state Supreme Court to enforce the policy; the insurers had the suit placed in the Eastern District.

Li is represented by Robin Cohen and Burt Garson, principals at McKool Smith, in the insurance coverage case and Samuel Rosenthal, partner at Squire Patton Boggs, in the criminal case.

In March 10 court papers in the insurance case, Rosenthal said Li has "incurred legal fees of hundreds of thousands of dollars, which remain unpaid."

Given the length and complexity of the allegations in the FIFA indictment naming many defendants, Rosenthal said, "Li will be severely hampered in his ability to defend himself without additional funds."

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Republished from the New York Law Journal, a sister publication of PropertyCasualty360.com. To read the full story, click here.

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Judge orders insurers to pay legal fees of FIFA official

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