Insurance Commissioner John Garamendi issued the following statement today in regard to the jury’s award of $700 million in punitive damages against Artemis S.A. for its participation in a conspiracy to defraud the Executive Life estate:
“Today the jury found by clear and convincing evidence that Artemis S.A. was guilty of fraud, oppression or malice against the Executive Life estate and deserved to be punished.
“We have said all along that wrongdoers should not profit from fraud. Today the jury agreed with us by ordering Artemis to pay $700 million in punitive damages to ELIC policyholders, validating our longstanding claims against the French consortium that defrauded the state and the policyholders of the former Executive Life Insurance Company. This award of $700 million will be a great help to policyholders as they attempt to recover from the financial damage caused by this fraud. I thank the jury for its decision.
“Attorneys for the Department of Insurance had previously secured $715 million in settlements. These settlements include $605 million paid by other members of the conspiracy, including Aurora, Credit Lyonnais and CDR Enterprises and $110 million paid by Artemis to avoid criminal prosecution.
“The jury in our case had already found that Artemis S.A., Credit Lyonnais and others had engaged in a conspiracy to fraudulently obtain assets from the Executive Life estate. It also rejected the defense’s argument that the Insurance Commissioner had knowledge of this scheme before it was uncovered. Today, once again, the jury has used its wisdom and careful consideration of the facts to reach the right decision on behalf of the policyholders.
“As we have said from the very beginning of this case, the French investors who bought Executive Life and its assets did so illegally by hiding the true controlling ownership of their group. That any of the conspirators should gain financially from the fraud is wrong. Today’s decision by the jury is the latest victory in our effort to see that the money goes to whom it rightfully belongs.
“In the damages phase of the trial, the jury heard evidence that Artemis received substantial profit from its participation in the conspiracy. The California Supreme Court and appellate courts have long held that punitive damages may be based on the amount of profit earned by a defendant through its fraud. ‘Removal of any profits the defendant has earned by a wrongful act is a logical step toward deterring its repetition or imitation.’ Johnson v. Ford Motor Co., 35 Cal. 4th 1191, 1208 (2005). ‘In our view, it is proper and fitting to ‘punish’ a defendant by stripping the defendant of wealth gained through [fraud]. A punitive damages award specifically tailored to this objective can never be excessive.'” Cummings Medical Corp. v. Occupational Medical Corp., 10 Cal. App. 4th 1291, 1300 (2d Dist. 1992).
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