CNN.com - Ex-Credit Lyonnais duo indicted
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LOS ANGELES (Reuters) -- U.S. prosecutors have unsealed criminal indictments against two former chairmen of French bank Credit Lyonnais and four others for alleged fraud in the takeover of a failed California insurer over a decade ago.
The six, including Jean Peyrelevade and Jean Yves Haberer, both former Credit Lyonnais chairmen, were indicted on a range of charges Wednesday, including conspiracy, mail fraud, wire fraud and making false statements to U.S. banking regulators, court documents showed.
The alleged fraud involved a scheme to hide the illegal involvement of Credit Lyonnais, then owned by the French government, in taking over Executive Life Insurance Co., a California insurance company that failed in 1991 after its junk bond portfolio plummeted in value.
At the time, U.S. law prohibited banks from owning insurers and state law banned foreign governments from owning California insurers.
The other former Credit Lyonnais officials named in the indictment were: Francois Gille, a deputy managing director; and Dominique Bazy, an executive committee member.
Jean-Francois Henin, formerly managing director of Credit Lyonnais subsidiary Altus, and Eric Berloty, a partner in a French consulting firm that provided financial services for Altus, were also indicted.
U.S. Attorney Debra Yang also revealed the terms of plea agreements reached with French insurer MAAF and its chairman and managing director, Jean Claude Seys, as well as settlement agreements with billionaire Francois Pinault and his holding company, Artemis S.A.
The French Finance Ministry said earlier this week that it had ratified the $770 million settlement.
Under the agreement, Credit Lyonnais and MAAF will plead guilty to three counts of making false statements to U.S. regulators and will each be placed on three years' probation.
Credit Lyonnais and the French government agency that rescued it after it later ran into financial trouble agreed to pay $575 million in fines.
MAAF's Seys agreed to plead guilty to two charges of concealing information from U.S. regulators. In return, prosecutors agreed to recommend a sentence of five years probation, as well as a fine of about $250,000.
A separate settlement resolved all federal claims against Artemis, Pinault and Artemis director general Patricia Barbizet and others.
Artemis agreed to pay the U.S. government $185 million and Pinault and the others pledged to cooperate in the ongoing investigations. The money will be placed in an escrow account pending resolution of a civil lawsuit filed by the California Department of Insurance.
U.S. and California officials say Credit Lyonnais and related entities acquired control of Executive Life and its valuable junk bond portfolio through a series complex financial maneuvers that short-changed more than 300,000 policyholders.
The case turns on French "portage" agreements, under which one party agrees to temporarily hold shares of a company for the benefit of another party. Credit Lyonnais used such arrangements in violation of U.S. law to hide its stake in Executive Life, the indictment said.
Pinault's Artemis bought the Executive Life bond portfolio in 1992 and reaped a windfall on it. Pinault, a retail magnate, later bought two-thirds of Executive Life.
Peyrelevade became head of Credit Lyonnais after the Executive Life purchase but denied reading a 1993 fax that would have alerted him to the illegal nature of the deal. Bazy was his second-in-command.
Credit Lyonnais is now owned by its bigger rival Credit Agricole SA
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