Gary Mendoza, Republican Nominee for Insurance Commissioner condemned former Insurance Commissioner’s John Garamendi’s refusal to testify at a congressional hearing Oct. 10 into the Executive Life scandal held by the House Government Reform Committee. “This is simply John Garamendi’s latest insult to the Executive Life victims. His refusal to even show up demonstrates his lack of concern and respect for the 360,000 policy holders, many of whom are elderly and seriously ill, and have been left financially devastated by his gross mismanagement of the Executive Life insolvency,” declared Mendoza.
The House committee explored the Justice Department’s investigation into Credit Lyonnais, the government-controlled French bank which illegally purchased the insolvent Executive Life Insurance Company’s assets. Then-Insurance Commissioner Garamendi allegedly sold the company’s assets despite the strenuous opposition of Executive Life policyholders who actually filed suit to block the sale, reportedly making billions for the French bank and other investors, while thousands of policyholders were left financially destitute. Garamendi maintains that he didn’t know that Credit Lyonnais was involved in the sale, an argument that has allegedly since been disputed by the French bank.
“It is noteworthy that John Garamendi refused to back up his version of events when he would have been under oath before a congressional committee,” said Mendoza. “If what Garamendi has said is true about what happened with Executive Life, then he should have been happy to help the Executive Life victims by supporting Congress’ efforts to have Credit Lyonnais aggressively pursued by the Justice Department. So much for the sincerity of John Garamendi’s concern for the thousands of elderly and ill Executive Life victims he created through his bungling and so much for the veracity of his version of events.”
Mendoza also drew attention to the testimony of Dru Ann Jacobson, the daughter of one of the Executive Life victims who testified before the House Government Reform Committee on behalf of her mother and other Executive Life victims. Jacobson said to the Committee, “Finally, we regret that the Justice Department has not investigated former Insurance Commissioner John Garamendi’s role. To begin with, why did Mr. Garamendi charge the policyholders millions of dollars for consulting fees with top investment bankers to set a value on Executive Life’s junk bonds, when he never disclosed their finding. This enabled him to tell the court that he didn’t know the value of the bonds and to sell them to Credit Lyonnais and Leon Black at fire sale prices. What ever happened to a report that his own staff completed that set a face value to the bonds but was never made public? Mr. Garamendi’s actions beg for a thorough examination.”
Mendoza responded to the testimony by saying, “Ms. Jacobson’s questions deserve to be answered for the sake of her family and thousands of policyholder families who John Garamendi has hurt so badly. Making the Executive Life victims financially whole will be one of my top priorities as Insurance Commissioner. John Garamendi has already proven today, as well as many times previously, that when it counted, he couldn’t be trusted to protect those who needed his help the most.”
Lee Fink, press liaison for the Garamendi campaign, told Insurance Journal , “John Garamendi declined the committee’s invitation to speak because trial counsel for the Department of Insurance, who is handling the case, told John Garamendi that it would not be in the best interests of the case, or the former Executive Life policy-holders to testify in front of Congress at this time. It would simply give the French Defendants free discovery into the Department’s legal and factual contentions. It is sad that Gary Mendoza, as a lawyer who has done a lot of work for HMO’s and insurance companies, is ignorant of such a basic principle. It shows that he is interested only in politics, not in policyholders.”
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