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March 4, 1997




Donald C. Smaltz, Independent Counsel In Re Espy, announced:

   Today, in the case of United States v. Henry William Espy, Jr. in Oxford, Mississippi, Judge L.T. Senter, Jr. dismissed the remaining count of a six-count indictment against Henry Espy, the brother of the former Secretary of Agriculture Alphonso Michael Espy. The case before Judge Senter encompassed the six counts that New Orleans Federal Judge Edith Brown Clement transferred to Mississippi from the Eastern District of Louisiana in November 1996.

   Independent Counsel Donald C. Smaltz stated:

      "Henry Espy's acquittal now resolves the last of the charges in this particular indictment. In sum, five of six defendants in what was originally a 16-count indictment have been adjudged guilty. We accept the Judge's decision and move forward."

   On February 24, 1997, Alvarez T. Ferrouillet, Jr., a New Orleans lawyer, pleaded guilty to this same indictment, which charged one count of conspiracy and five counts of false statements to the First National Bank of Clarksdale, a federally-insured bank, in connection with a $75,000 loan to Henry Espy. Municipal Healthcare Cooperative, Inc., a healthcare consulting firm owned equally by Ferrouillet and his brother, pleaded guilty to the same six counts. Ferrouillet & Ferrouillet, the New Orleans law firm in which Ferrouillet was a partner with his brother, pleaded guilty to conspiracy to make false statements to the First National Bank of Clarksdale. Previously, on December 19, 1996, a jury convicted Ferrouillet and John J. Hemmingson, Chairman of the Board and Chief Executive Officer of Crop Growers Corporation, of obtaining a $20,000 check from Crop Growers Insurance by fraud, which was transported in interstate commerce to Louisiana and used as an illegal campaign contribution to help retire Henry Espy's campaign debt. The federal jury in New Orleans also convicted Hemmingson and Ferrouillet of money laundering and engaging in illegal monetary transactions. Additionally, Ferrouillet was convicted of making false statements to federal agents.

The Independent Counsel's investigation is continuing.


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