Former FIFA Executive Entitled to Criminal Defense Costs in Bribery Case; D&O Insurers Required to Pay

Eduardo Li, one defendant of a widespread racketeering and fraud prosecution against FIFA and its members, brought this case seeking a declaration his insurers have to pay and advance his criminal defense costs regarding those prosecutions. The Eastern District of New York Court found that the insurers must immediately reimburse and advance legal costs for Li under a directors and officers liability policy.

Eduardo Li and other members of FIFA are the subject of criminal actions for corruption related to the administration of the international soccer organization. Li is accused of taking bribes and kickbacks in connection with World Cup qualifiers and was arrested in May 2015. Li is a former executive member of FIFA, former executive member of CONCACAF, or the North, Central American and Caribbean Association of Football, and former president of the Costa Rican soccer federation.

Li brought this case seeking a defense under the policy, which provides broad coverage to an insured for defense, investigation and extradition costs for alleged or actual wrongful acts. The judge granted Li’s preliminary injunction and required the insurers to immediately reimburse and pay the costs of Li’s indictment, extradition and defense.

The court weighed the evidence and found that Li may be subject to hardship if denied the funds and the insurers would likely suffer little hardship in being forced to pay defense costs as the insurers may recoup those funds, as provided in the policy, if no coverage applies. The court noted that Li had established a clear and substantial likelihood of success on the merits based on the policy’s broad coverage for defense costs. At the same time, the court found that the insurers’ argument that the policy only paid for investigative proceedings and not indictments was unpersuasive.

The judge denied the insurers’ forum selection and forum non conveniens arguments and instituted the preliminary injunction giving Li access to defense funds.

Eduardo Li v. Certain Underwriters at Lloyd’s London, Axis Specialty Europe SE, United States District Court for the Eastern District of New York, 15 CV 06099 (RJD).