PARIS — François Pinault, the French retail and luxury baron, could face over a hundred-million dollars in fines in a civil suit for his allegedly fraudulent role in the acquisition of failed California insurer Executive Life.

Negotiations for an out-of-court settlement between the French government and U.S. prosecutors failed late Tuesday because an agreement could not be reached that would have included Pinault, sources said.

France has been talking for months with American prosecutors to reach a settlement in the case, stemming from French bank Credit Lyonnais’ acquisition of Executive Life in the early Nineties, when California law forbade banks from owning insurance companies.

Financed by a $2 billion loan from Lyonnais, Pinault then bought the insurer’s junk bond portfolio, reaping huge profits.

Sources on Wednesday said that an out-of-court agreement could still be reached, although chances appeared slim after Tuesday’s meltdown.

Talks snagged because Pinault declined to meet prosecutors’ demand for $185 million in fines, according to sources. It is believed Pinault was willing to pay $130 million.

Pinault is also said to have contested the terms of payment. Prosecutors wanted $100 million of the fine to be nonreimbursable if Pinault was cleared of all guilt in a civil suit, sources said.

The entrepreneur, who controls Italy’s Gucci Group, has denied all guilt.

The case erupted in the late Nineties after U.S. prosecutors received an anonymous tip from a French businessman.

Pinault has since been granted immunity in the federal case in exchange for testimony. Although it is believed Pinault will not be forced to appear before a jury in the penal case, he could still face fines in a civil suit.

Prosecutors have upped the pressure on Pinault by targeting some of his closest collaborators, including Emmanuel Cueff, formerly managing director of Pinault’s private holding company, Artemis, through which Executive Life was acquired.

Reached Wednesday, a spokeswoman for Pinault declined all comment on the case. A court date for the penal case has yet to be set.

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