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Life Health > Life Insurance

Garamendi: Guilty Plea Would Advance Exec Life Civil Suit

By Jim Connolly

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Garamendi: Guilty Plea Would Advance Exec Life Civil Suit

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A guilty plea in a government investigation concerning allegations of manipulation in the purchase of the junk bond portfolio of the failed Executive Life Insurance Company would advance a civil suit being pursued by California Insurance Commissioner John Garamendi, the commissioner says.

A representative for the U.S. attorney’s office said an agreement in principle is pending with the French bank Credit Lyonnais and a French government agency, Consortium de Realisation, according to an article in The New York Times. At press time, the U.S. attorney’s office could not be reached for comment.

The bank and the French agency will pay a combined total of about $575 million, according to the Times.

“This is a major and important step in achieving justice in this case,” Garamendi said in an interview. “It is clear that the allegations were correct, that they lied and defrauded the state.”

Garamendi declined to discuss whether the California department has been in contact with the defendants in an effort to reach a settlement, but he said settlements in civil cases are common. He also said the California department stands ready to go to court.

“We are seeking disgorgement of all illegal profits,” Garamendi said. He declined to estimate how big those profits might be.

Reproduced from National Underwriter Life & Health/Financial Services Edition, September 8, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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