Four days of hearings into Stanford Financial Group dealings ended with hints U.S. District Judge Nancy Atlas will free Lloyd's of London from defendants' legal fees.

Reuters' News Service reported that Atlas told the Houston, Texas, federal courtroom she had a suspicion that Lloyd will not be fronting legal fees after the hearings.

SFG former executives Allen Stanford, accounting executives Mark Kuhrt and Gilbert Lopez and Chief Investment Officer Laura Pendergest-Holt sued Lloyd's over payment of the fees. But that policy has a money laundering exclusion, so Lloyd's must prove to Atlas that the plaintiffs committed that act.

Holt, a Baldwyn native, struck a deal with the insurer before the start of the hearings Tuesday. She and the three other plaintiffs in this case are accused of participating in an alleged $7 billion Ponzi scheme centered around fraudulent certificates of deposit issued by Stanford's offshore bank in Antigua.

Lawyers for Stanford and the accounting executives have placed a lot of the blame on James Davis, another Baldwyn native and the former chief financial officer of Stanford International Bank Ltd., who pleaded guilty last August to three felony counts related to the scheme.

Davis, who lives in Michigan while he's free on bond, had the final sign-off on numerous financial documents from SIB, the institution the government claims is at the center of the alleged scheme, lawyers and witnesses said.

Lawyers for former CEO Stanford and the accounting executives who worked for him sought to distance their clients Friday from the alleged financial wrongdoing insurer Lloyd's of London cites as a reason to void a policy covering their defense fees.

"Mr. Stanford was not really a hands-on guy," Robert Bennett, Stanford's attorney, said during closing arguments after four days of hearings in federal court. "Mr. Stanford wasn't at the center of anything illegal or wrong."

The nondisclosure of a nearly $2 billion unsecured loan to Stanford, misrepresentations to investors and phony accounting are all grounds to stop paying claims under a directors and officers policy, the British insurer said.

"It is clear that the money collected for the CDs was criminal property as defined by the policy," said Barry Chasnoff, an attorney for Lloyd's. "There was no evidence offered to the contrary."

Blame Davis

"I believe that Mr. Kuhrt and Mr. Lopez were middle-level accounting managers and it was Mr. Davis' responsibility to deal with the auditors on these issues," Alan Westheimer, an accountant hired by Kuhrt and Lopez as an expert witness, testified.

Stanford also relied on Davis - his former No. 2 man at the company and former classmate from Baylor University - as well as on the professional advice of accountants and lawyers, Bennett told the hearing.

Still, Atlas told the hearing it was clear to her that Lopez and Kuhrt "were close to the top," and were close to Davis.

Lloyd's has advanced as much at $6 million to pay for Stanford's attorneys, many of whom have left the case or been fired by their client.

Stanford, who is 60 and is in jail awaiting a January trial, faces one count of conspiracy to commit money laundering as part of a 21-count June 2009 indictment.

The hearings were seen as a preview of Stanford's criminal case. Many people involved in the case, including Stanford and Lopez, invoked their Fifth Amendment right and did not testify, so much evidence centered on documents that are part of the government's civil and criminal case.