French Executive Pleads Guilty in Executive Life Case

July 27, 2006

A former managing director of a subsidiary of Credit Lyonnais plead guilty Monday to four felony counts of causing the bank to make false statements to the Federal Reserve Bank.

Jean-Francois Henin, 62, of Paris, entered his plea in federal court where U.S. District Judge Dickran Tevrizian sentenced him to five years probation and ordered him to pay $1 million fine. Henin also will be banned from entering the United States for five years.

The charges against Henin are part of a larger criminal and regulatory investigation involving the takeover of failed insurer Executive Life, which was declared insolvent and seized by the California Department of Insurance in 1991. Executive Life collapsed after its portfolio of junk bonds — some 60 percent of its assets — lost much of its value.

The junk bonds were sold for $3.25 billion to an investor group led by Henin, head of Altus Finance SA, a subsidiary of Credit Lyonnais. The portfolio of policies was then sold to French insurer MAAF Assurances SA.

The investors ended up collecting billions of dollars from the junk bonds when the market picked up.

California later sued and settled with several defendants in the case, including Credit Lyonnais and Aurora National Life Assurance Co, for more than $600 million.

A federal grand jury in Los Angeles indicted six French executive in 2003, including Henin, on various criminal charges for their role in a conspiracy to illegally acquire the assets of the bankrupt Executive Life.

Former Credit Lyonnais chairman Jean Peyrelevade pleaded guilty earlier this year to charges involving false statements to the Federal Reserve. Others who have struck plea deals include Jean-Claude Seys, who headed the MAAF Assurances SA, and former Altus chairman Dominique Bazy.

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