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A federal judge threw out a lawsuit by California Attorney General Bill Lockyer that accused New York financier Leon Black, the French bank Credit Lyonnais and others of fraudulently acquiring the assets of defunct Executive Life Insurance Co. in the early 1990s. The Thursday ruling by federal Judge A. Howard Matz of the Central District of California said that California’s insurance commissioner, who is pursuing a separate suit against some of the same defendants, had “exclusive standing” to lodge charges under state law. The attorney general’s suit, filed a year ago, named John Hannan, a partner at New York private equity firm Apollo Management, as well as former Apollo partners Craig Cogut and Eric B. Siegel, as defendants. Black, who heads Apollo, was named a defendant only three months ago. Following Matz’s ruling, Apollo issued a statement expressing the firm’s pleasure over the judge’s decision. Black is not involved in the insurance commissioner’s suit. Gary Fontana, a lawyer whose investigation on behalf of the insurance commissioner has led to fraud changes against Credit Lyonnais and Altus Finance, a onetime affiliate of the bank, has specifically absolved Black of wrongdoing. Sandra Michioku, a spokeswoman for Lockyer, didn’t return a call for comment. Friday’s Los Angeles Times quotes her saying that Lockyer was considering an appeal to the 9th U.S. Circuit Court of Appeals. In 1991 and 1992, Apollo advised Credit Lyonnais on its $3.25 billion purchase of Executive Life’s junk bond portfolio. The bank and Apollo made at least $2 billion in profits selling the notes. Lockyer’s suit accused the bank, Altus, Black and others of using a front company, MAAF Assurance, to secretly take over Executive Life’s insurance operations in addition to the bonds. At the time, California law forbade entities controlled by foreign governments, such as Credit Lyonnais, from owning California insurers. Copyright (c)2002 TDD, LLC. All rights reserved.

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