Attorney General Lockyer Sues Companies, Individuals and Bank Once Owned by French Government for Conspiring to Raid Executive Life

Wednesday, June 20, 2001
Contact: (916) 210-6000,

(SAN FRANCISCO) – Attorney General Bill Lockyer today announced the filing of a lawsuit against an international bank once owned by the French government, a group of companies and individuals who allegedly conspired to cheat policyholders of Executive Life Insurance Company out of billions of dollars.

The lawsuit seeks payment of not less than $2 billion from Altus Finance, Credit Lyonnais, MAAF Assurances, Francois Pinault and 10 others named in the state complaint.

"By secretly working together, we believe a group that included foreign investors illegally schemed to buy at bargain prices the insurance and bond assets of an insolvent Executive Life which cheated more than 300,000 policyholders and retirees out of billions of dollars," Lockyer said.

When seized by the California Insurance Commissioner in April 1991, Executive Life was one of the largest life insurance companies in the United States with one of the largest portfolios of junk bonds in the world valued at more than $6 billion. The collapse of the junk bond market two years earlier forced the sale of bond and insurance company assets.

The complaint filed in San Francisco Superior Court alleges that a group of investors led by Altus Finance, an investment subsidiary of Credit Lyonnais, the giant French-owned bank, contracted secretly in August 1991 with a small, financially troubled French auto insurer, MAAF Assurances, and several other small companies to act as "fronts" to conceal the bank's true involvement in the purchase of Executive Life assets. The secret arrangements hiding the bank's true involvement allegedly violated state and federal banking and securities laws, as well as state insurance laws that prohibit foreign governments from owning California insurance companies.

The interest in Executive Life insurance operations acquired by Altus and the MAAF group were sold later to French business tycoon Francois Pinault and his company group, Artemis. The complaint alleges that the existence of secret agreements between these companies and the French bank.

According to the complaint, the fronting arrangements known in French as "contrats de portage" allowed MAAF and other companies to appear to be the purchasers of Executive Life assets, while Altus and Credit Lyonnais actually had full ownership and control.

In December 1991, the Insurance Commissioner and the state Superior Court judge overseeing the estate of Executive Life, unaware of the secret contracts, approved a sale of junk bonds and insurance business to Altus and the MAAF-led investor group for $3.5 billion.

The Attorney General's complaint states that neither the court or Insurance Commissioner could have approved the sale had the French bank, its Altus subsidiary or MAAF disclosed the secret contracts. The complaint adds that the deceit cost California an opportunity to reap substantial benefits from the sale of the insurance business and the junk bonds that would have benefitted Executive Life policyholders and retirees.

"In reality, the participation of MAAF and other fronts was a sham designed to deceive the state, the commissioner, the ... court and other bidders," the complaint said.

The complaint alleges violation of California's False Claims Act and state unfair business practices laws. Additionally, the complaint alleges that the conspiracy constituted a racketeering enterprise under federal civil RICO (Racketeer Influenced Corrupt Organization) law.

Lockyer said the complaint stems from a two-year investigation by the Attorney General's False Claims Section, which is continuing its probe into the matter.

Others named in the lawsuit were CDR Enterprises, Consortium de Realisation SA, MAAF Vie SA, Ominium Geneve SA, Aurora National Life Assurance Company, New California Life Holding, Inc., Artemis SA, Artemis Finance SNC, Aurora SA and Artemis America Partnership.

Copy of the complaint.

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PDF icon 01-064.pdf181.68 KB
PDF icon 01-064.pdf181.68 KB