PRESS RELEASE

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

   Today, Crop Growers Corporation, the second largest private seller of federal multi-peril crop insurance, was found guilty and sentenced to pay a $2 million fine for conspiring to defraud the Federal Election Commission by concealing and disguising $46,000 in illegal corporate contributions to the Henry Espy for Congress campaign in 1993 and 1994, and with falsifying its books and records to hide these illegal contributions.

   Crop Growers, on the eve of its scheduled trial, pleaded nolo contendere to a two-count indictment which charged that, in 1993, corporate contributions totaling $26,000 were disguised as individual contributions from various employees, related parties, and their spouses, and that an additional $20,000 corporate contribution was made in 1994 to Henry Espy's campaign debt retirement effort through a New Orleans lawyer. Henry Espy, the brother of former Agriculture Secretary Alphonso Michael ("Mike") Espy, ran unsuccessfully for his brother's vacated congressional seat in 1993 and, in the campaign, incurred substantial indebtedness which he was unable to pay. The illegal contributions were made to the Henry Espy for Congress Committee so that Crop Growers and its principals could gain access to then-Secretary of Agriculture Mike Espy for the purpose of favorably influencing him on issues of interest to Crop Growers. On March 2, 1994, then-Secretary Espy introduced the Federal Crop Insurance Reform Act of 1994, legislation of particular interest to the private crop insurance industry. The Reform Act became law approximately six months later. From 1991 through and including 1995, Crop Growers derived substantially all of its revenues from marketing and servicing federal multi-peril crop insurance, a program within the jurisdiction of the Department of Agriculture and under the direction, in 1993 and 1994, of then-Secretary Mike Espy. Crop Growers reported service fees for the year ended December 31, 1995 of $84.7 million, an increase of 75% from the previous year.

   The corporation's books were falsified by recording illegal corporate contributions as legal fees, travel advances, expense account advances, consulting fees, computer purchases, and an advance on crop loss adjustments paid to the individuals who served as conduit contributors on behalf of Crop Growers.

   Crop Growers became a publicly-held company in 1994 when it sold a total of 3,900,000 shares, raising approximately $35 million in two separate public offerings. Publicly-held companies and their subsidiaries are required by the federal securities laws to make and keep books, records, and accounts which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of their assets.

   Mr. Smaltz stated:

"It has been almost 20 years since Congress passed the Ethics in Government Act of 1978 which clearly prohibited corporations from contributing to federal elections and, just as clearly, limited individual contributions to $1,000 per person. Congress also enacted specific record keeping laws to deter and detect illegal conduct. The fact that these types of violations continue to occur, even after Congress' efforts to reform the system, is a national disgrace. Corporate America is clearly on notice that when corporations make illegal federal campaign contributions they can expect to be prosecuted under a variety of criminal statutes and, when convicted, to incur substantial penalties for their offenses. This criminal activity substantially erodes confidence in the integrity of our elected officials and pollutes and corrupts the political process."

   In other matters previously filed by the Independent Counsel:

• In October 1995, James H. Lake, a former Sun-Diamond lobbyist, pleaded guilty to participating in a scheme at the request of Richard Douglas to circumvent the federal campaign contribution laws to make illegal contributions to the failed campaign of Mike Espy's brother, Henry Espy. Mr. Lake has not yet been sentenced.
• In September 1996, Sun-Diamond Growers of California was convicted by a federal court jury in the District of Columbia of fraud and making illegal gratuities to former Secretary of Agriculture Mike Espy. Sentencing is set for March 26, 1997.
• In November 1996, Brook K. Mitchell and 5M Farming Enterprises, Inc. each pleaded guilty to four felony counts of conspiracy, false statements, and false entries in a scheme to defraud the U.S. Department of Agriculture of more than $700,000. A sentencing date has not yet been set.
• On December 19, 1996, in a related case brought by the Independent Counsel in New Orleans, Louisiana, a federal court jury convicted John Hemmingson on three of the four counts against him, one count of interstate transportation of a fraudulently obtained $20,000 check from a subsidiary of Crop Growers, and two counts of money laundering. The jury also convicted Alvarez T. Ferrouillet, Jr., the Louisiana lawyer who was chairman of the Henry Espy for Congress Campaign debt retirement committee beginning in 1993, on each of 10 counts charging him with false statements to federal agents, interstate transportation of the fraudulently obtained $20,000 check from the Crop Growers subsidiary, and money-laundering.

   Other cases which have been filed by the Office of Independent Counsel and are awaiting trial are:

• United States v. John J. Hemmingson and Gary A. Black (D.D.C.). John Hemmingson, former Chairman of the Board, Chief Executive Officer and largest shareholder of Crop Growers Corporation, and Gary A. Black, a former Senior Vice President, Chief Financial Officer, director and second largest shareholder, are facing trial in the District of Columbia on a three-count indictment which alleges conspiracy and two substantive counts of causing the Henry Espy for Congress Committee to make material false statements and file a false report of receipts and disbursements with the Federal Election Commission in March 1993 and August 1993. The trial is scheduled to begin on January 27, 1997 before the Honorable Gladys Kessler, United States District Court Judge.
• United States v. Faust (S.D. Miss.) , scheduled for trial on February 4, 1997;
• United States v. Henry William Espy, Jr., Alvarez T. Ferrouillet, Jr., Ferrouillet & Ferrouillet, and Municipal Healthcare Cooperative Inc. (N.D. Miss.), scheduled for trial on February 24, 1997;
• United States v. Jack L. Williams (D.D.C.), scheduled for trial on March 17, 1997; and
• United States v. Richard Douglas (N.D. CA), not yet scheduled for trial.