Hoping to earn income to help pay for her children's tuition, Dona Evans invested in Lloyd's of London in 1987. The legendary insurance giant was recruiting fresh capital--in fact, Lloyd's was desperate for it--and Evans jumped at the chance to become a Lloyd's Name, as the elite 300-year-old institution calls its investors. In Britain, being a Name was a sure thing; you became economic royalty, even if you weren't one of the many Names who held real titles.
Still, Evans was worried about reports that Lloyd's was facing a rising tide of claims from asbestos-industry workers who were dying of lung diseases--cancer and asbestosis--caused by exposure to the building material. Tut, tut, said a Lloyd's executive who dismissed the risk and explained that while the Names "were of course liable in theory for losses right down to their cufflinks, in practice it never happens because it's all reinsured."
Fast-forward to the present. Lloyd's has indeed been rocked by ruinous asbestos claims, and managed to survive only with the help of a pliant Parliament. But a stone-broke Evans has lost her home. Thousands of Names have been wiped out financially. Some committed suicide. Even such notables as brokerage founders Charles Schwab and Dan Lufkin have been exposed to the loss of millions in what has been called the biggest and baldest swindle in history, perpetrated behind the clubby doors of the world's most respected insurance organization.
Evans is fighting it out, party to a huge lawsuit born of Lloyd's alleged perfidy, which comes to trial in London next week. The suit was filed on behalf of dissident Names who have refused to join a 1996 settlement, claiming that Lloyd's, facing insurmountable losses, duped them by concealing the billions of dollars of asbestos claims it knew to be in the pipeline. "I believed I could trust Lloyd's to look after my interests in much the same way I would trust my bank," says Evans, who lives in London. As a result, she says, "I pledged my house and lost everything."
Lloyd's denies any wrongdoing and will defend itself vigorously. The insurance behemoth "has never been found guilty of fraud," says spokesman Adrian Beeby. Lloyd's has already beaten back a welter of legal actions in Britain. But it faces more charges on this side of the Atlantic. The U.S. Attorney in New York City has made Lloyd's the target of an intensive criminal investigation. And in a pivotal case due for trial early next year before a California state court in Los Angeles, a father and two daughters who lost heavily in Lloyd's have brought allegations of fraud that closely parallel the London charges.
TIME's European edition last week published a 23-page investigative report on Lloyd's by author David McClintick, whose books include the 1983 best seller Indecent Exposure, about embezzlement and power games at Columbia Pictures. The TIME report lends some support to assertions that top Lloyd's execs were aware of the devastating impact that the asbestos claims were likely to have, even as Lloyd's was feverishly recruiting unsuspecting new Names to help absorb the losses.