Free Republic

Remember the old saying, "Once burned, twice shy"? It's supposed to mean that when one has a bad experience, one should be more cautious in similarly dangerous circumstances. California got burned in the early 1990s when Leon Black, fresh off a career with the scandal- tainted Drexel Burnham Lambert junk bond shop, set up his own investment firm and persuaded the state's new insurance commissioner, John Garamendi, to seize a supposedly insolvent Executive Life. Executive Life had a fat portfolio of junk bonds that Black had helped assemble, and Garamendi allowed him to broker a deal with some French buyers...

A new state auditor's report concludes that Insurance Commissioner John Garamendi recovered $1.1 billion in litigation over the failed Executive Life Insurance Co. but it fails to address hotly contested questions over whether he achieved the best results for policyholders. In 1991, during Garamendi's first stint as insurance commissioner, he seized control of Executive Life to protect its 330,000 policyholders because of heavy losses in the company's multibillion-dollar junk bond portfolio. His handling of the matter has been assailed in a blitz of television commercials by the Republican Party and his opponent in the race for lieutenant governor, state Sen....

LOS ANGELES California's Department of Insurance has recovered roughly $988 million, after legal costs, for Executive Life policyholders and guaranty associations since taking over the failed insurance company in 1991, according to a state report released Thursday. In the report, state Auditor Elaine Howle looked at how state insurance officials have managed funds recouped through litigation finalized last year. The department has received more than $1.1 billion from litigation, while racking up $165 million in legal costs, according to the report. The review could not ascertain how much of the money has been distributed to policyholders or the guaranty associations,...

IN A STATE FILLED WITH OBSCURE elected official positions, none is more pointless than lieutenant governor. Officially president of the state Senate, he rarely shows up in the chamber and can't even cast a vote except to break a tie. His primary task under the 1879 state Constitution is to be in charge when the governor is out of state — presumably because it would take too long for the governor to get telegraphed notice of an emergency and return by stagecoach. --snip-- As the state's first elected insurance commissioner, Garamendi was a fearless and capable enforcer of Proposition 103,...

McClintock's latest attack ad uses Garmendi footage out of contextState Sen. Tom McClintock, running for lieutenant governor against state Insurance Commissioner John Garamendi, has a new ad attacking his opponent. Following is the text of the ad and analysis by Bee Political Editor Amy Chance.• TEXT: Sue Watson: We lost our home.• ON SCREEN: The truth about John Garamendi's record as insurance commissioner.• Vince Watson: As insurance commissioner, Garamendi sold our insurance company to a junk bond king and foreign bank. They made billions while elderly and handicapped policyholders were financially devastated.• Announcer: And, after years of lawsuits and investigations,...

Mendacious: Given to or marked by deliberate concealment or misrepresentation of the truth. John Garamendi is running for Lt. Governor and to supplement an apparent mendaciousness, he is praying for induced selective memory loss. Some fifteen years ago, as California insurance commissioner, Garamendi seized the assets of the Executive Life Insurance Company. In doing so, he allowed a questionable junk-bond player and a French government-owned bank to realize a humongous windfall despite a bunch of annuities and policyholders getting the short (and dirty) end of the stick. It is beyond troubling that the man who is ‘supposed’ to be the...

ohn Garamendi has served two terms as state insurance commissioner and believes a quirk in term-limits law would allow him to seek a third this year. But the Walnut Grove Democrat is running for lieutenant governor instead, and said Tuesday he wants to move on to issues beyond insurance -- such as global warming and education. Besides, he added in a meeting with The Bee Capitol Bureau, he doesn't have the money to run for governor. "You got $40 million sitting in your pocket?" he said. "I don't." Garamendi, 61, criticized the role of money in politics. "It is a...

The state Republican Party has launched a television ad attacking state Insurance Commissioner John Garamendi for mishandling the collapse of the Executive Life Insurance Co. The ad targeting Garamendi, a Democrat running against Republican state Sen. Tom McClintock, R-Thousand Oaks, for lieutenant governor, began running Aug. 28 in the Sacramento and Los Angeles media markets. (snip) ANALYSIS: The GOP advertisement attempts to weaken Garamendi, a former gubernatorial candidate and statewide officeholder, by exploiting what is perhaps his greatest political vulnerability. Garamendi has long been dogged by criticism for allegedly mishandling the collapse of the Executive Life Insurance Co. In 1991,...

GOP Unveils Television Ad Criticizing Garamendi’s Role in Executive Life Scandal The California Republican Party launched a television spot Monday that criticizes John Garamendi’s role in the Executive Life insurance scandal. In what could easily be described as an Enron-type scandal, Executive Life Insurance Company was destroyed and the assets seized in 1991. California’s biggest insurance scandal is also one of the most complex cases in California history. Many Executive Life policyholders hold Insurance Commissioner John Garamendi responsible for seizing the company and selling off the assets to a disreputable junk-bond artist and a French government-owned bank for a huge...

LOS ANGELES (AP) -- A federal judge has thrown out a $700 million punitive damages award won by the state of California in a lawsuit stemming from the takeover of failed insurer Executive Life by French investors. U.S. District Court Judge A. Howard Matz concluded Tuesday that the state's Department of Insurance was not entitled to receive the $700 million awarded by jurors in July as part of their judgment against French company Artemis SA, according to a summary of the order posted on the court's Web site. "This order addresses only the question of whether plaintiff (Insurance Commissioner) John...

Executive Life Insurance policyholders have feuded with state Insurance Commissioner John Garamendi over his 1991 seizure and resale of the company. They may find themselves in the same leaky boat, however, as the long-running financial, legal, diplomatic and political wrangle over billions of dollars in insurer assets nears a climax. Thousands of policyholders, many of them retirees and disabled who are dependent on income from annuities, are increasingly unlikely to receive a substantial recovery from the French businessmen who acquired Executive Life and its fat portfolio of junk bonds. And that means Garamendi is increasingly unlikely to get political relief...

The state's giveaway sale of Executive Life and the insurer's fat portfolio of junk bonds is the gift that keeps on giving - political headaches, that is. State Insurance Commissioner John Garamendi, who seized the troubled insurer in 1991 and then approved its sale, desperately wants to deflect the onus for the multibillion-dollar debacle that left tens of thousands of disabled and retired annuitants twisting in the wind. But try as he might to shift the burden onto the French buyers, it appears they will at most cede only a tiny fraction of their huge profits from the transaction. A...

LOS ANGELES – A federal judge urged both sides to resolve their differences after a jury found that a French company owned by billionaire Francois Pinault conspired to defraud California regulators as part of a scheme to take over failed insurer Executive Life. However, while ruling on the state's lawsuit, the jury cleared Pinault himself of any involvement in the scheme. Jurors also considered three allegations that the firm, Artemis SA, had caused harm to Executive Life policyholders. They found in favor of the defense on two of those counts. The rulings carried no immediate financial judgments. U.S. District Judge...

Even after sitting through eight weeks of complex testimony — some of it in French — the jury in the Executive Life Insurance Co. trial has been in no hurry to go home. Defying some early predictions of a quick verdict in the civil case, which pits state Insurance Commissioner John Garamendi against one of the richest men in France, the jury has been deliberating since April 18 and has given little indication that a decision is imminent. In what could be a sign that judicial patience may be getting a bit strained, U.S. District Judge A. Howard Matz told...

LOS ANGELES, Jan 20 (Reuters) - French bank Credit Lyonnais and a French government agency pleaded guilty on Tuesday to U.S. felony charges stemming from the takeover of a failed California insurer as part of a $772 million settlement reached last month. Credit Lyonnais, which is now owned by bigger rival Credit Agricole SA. (CAGR.PA: Quote, Profile, Research) , pleaded guilty to misleading U.S. banking regulators about the extent of its interest in companies that took over the failed Executive Life Insurance Co. The guilty plea will be used in a $3 billion civil case brought by the insurer’s 300,000...

<p>A year ago -- even six months ago -- the California political scenario for the next few years was well defined, to wit: The Legislature would remain in Democratic hands for the remainder of this decade, thanks to a bipartisan gerrymander of legislative districts enacted in 2001. As Gray Davis served out his second and last term as governor, five or six Democratic politicians would vie for the 2006 nomination, while Republicans, lacking a bench, would scramble to field a candidate. The voter revolt that ousted Davis in midterm and replaced him with Republican Arnold Schwarzenegger, however, means the Democrats are doing the scrambling.</p>

PARIS (AFP) - France has struck a draft deal with US authorities under which French parties would pay 770 million dollars to settle a long-simmering row over the contested purchase of a US insurer by a French bank. Finance Minister Francis Mer said Thursday an out-of-court settlement was in sight covering the purchase of failed California insurance company Executive Life by Credit Lyonnais bank a decade ago, a transaction that US authorities say was illegal. He said on RTL radio that an "agreement in principle" had been reached that should "be finalized by Monday." US sources close to the matter...

Talks collapsed over Mr Pinault's possible cooperation US prosecutors are to pursue a criminal probe into French bank Credit Lyonnais' purchase of insurer Executive Life. Prosecutors allege that the bank used illegal front companies to take over Executive Life in 1991. The announcement of an investigation follows a failure of the French and US Governments to agree a settlement. A successful prosecution could result in Credit Lyonnais losing its valuable US banking licence, as well as possible sanctions against individuals. At the centre of the case is French tycoon Francois Pinault, who allegedly looked after Executive Life's assets in...

<p>France Agrees to Pay U.S. $575 Million in Executive Life Case Sept. 3 (Bloomberg) -- The French government and Credit Lyonnais SA reached an agreement with U.S. prosecutors to pay about $575 million to avoid criminal charges related to the purchase of failed California insurer Executive Life, said people familiar with the negotiations.</p>