California Insurance Commissioner John Garamendi on Tuesday praised a Los Angeles Federal judge’s ruling that the Artemis company, reportedly a main conspirator in the fraudulent purchase of the Executive Life Insurance Co. (ELIC), must pay $190 million plus interest – for a total of at least $250 million – in restitution to victims of the fraud. The final decision in the case brings the total amount ordered or settled on behalf of defrauded ELIC policyholders to approximately $900 million.
The California Department of Insurance has long contended that a French consortium – including Artemis – committed fraud in order to gain control of ELIC and its assets during the early 1990s. The group hid the true identity of its controlling interest when it made an application for the ELIC purchase, allowing it to violate California laws regarding foreign ownership of insurance companies. The Tuesday ruling by Judge Howard Matz of the United States District Court in Los Angeles, upheld the Commissioner’s position that a fraud was indeed committed.
“I am pleased that the judge has confirmed what I have said all along – that you cannot profit from a fraud,” said Garamendi. “This should send a clear message. If you come to this Department you must tell the truth, the whole truth, and nothing but the truth.”
In reaching his ruling, Judge Matz, stated in pertinent part: “Owners and executives of insurance companies, including powerful and sophisticated companies like Artemis…must tell the truth and comply with the law.”
Prior to Tuesday’s ruling the Commissioner had secured settlements in the case with defendants CDR and Aurora. He also won default judgments against MAAF and Jean-Francois Henin. In May, a Los Angeles jury returned a verdict awarding the policyholders $700 million in punitive damages against Artemis. Judge Matz, however, threw out that award in October.
“I am currently considering our appeal options regarding the decision to throw out the jury verdict for punitive damages,” said Garamendi. “But in any case, I am pleased with our work on behalf of policyholders. Every major participant in this fraud has been brought to justice, either through criminal penalties, financial penalties, or both.”