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Ex-Chairman of French Bank Pleads Guilty in Exec Life Case

January 20, 2006|From Times Wire Services

Former Credit Lyonnais Chairman Jean Peyrelevade pleaded guilty Thursday to charges stemming from the French bank's purchase of Los Angeles-based Executive Life Insurance Co. in the early 1990s.

Peyrelevade, 66, entered guilty pleas in federal court in Los Angeles to two felony counts of causing Credit Lyonnais to make false statements to the Federal Reserve.

In a plea bargain with prosecutors, he was spared prison time. Peyrelevade, a French citizen, was sentenced to five years' probation, fined $500,000 and barred from visiting the United States for three years.

Under the plea deal, Peyrelevade was allowed to maintain that he did not engage in any wrongdoing. He stressed that point when he told U.S. District Judge Dickran Tevrizian that he was pleading "guilty

Court documents show that prosecutors dropped other charges against Peyrelevade in exchange for his plea.

Prosecutors accused Peyrelevade and others of covering up the illegal buyout of Executive Life from the Federal Reserve, which later issued sanctions against Credit Lyonnais and fined it $100 million. State and federal laws at the time prohibited foreign banks from owning insurance companies.

California took over the bankrupt Executive Life in 1991. A year later, state Insurance Commissioner John Garamendi sold its junk bond portfolio for $3.25 billion to an investor group financed by Credit Lyonnais. The junk bonds later jumped in value and were worth billions of dollars more.

In November, a federal judge ordered Artemis, a company controlled by French billionaire Francois Pinault, to pay California nearly $190 million plus interest as restitution for its role in the takeover of Executive Life. The company was found to have misled regulators when it purchased the junk bonds.

Although Peyrelevade wasn't named chairman and chief executive of Credit Lyonnais until 1993, he was named with other executives in an indictment. Many of them took plea deals.

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