AIG Update: Former Gen Re CFO Gets 18 Months

U.S. District Judge Christopher Droney sentenced former Gen Re CFO Elizabeth Monrad to 18 months in prison, to be followed by three years of supervised release, for her role in a fraudulent scheme to manipulate AIGAIG’s financial statements, according to PR Newswire.

Nora Dannehy, acting U.S. Attorney for the District of Connecticut and Dana Boente, acting U.S. Attorney for the Eastern District of Virginia, announced Monrad also was ordered to pay a fine in the amount of $250,000.

On Feb. 25, 2008, a federal jury found Monrad guilty of conspiracy, securities fraud, false statements to the U.S. Securities and Exchange Commission (SEC) and mail fraud charges. Evidence presented at trial proved that Monrad, who was General Re Corp.'s (Gen Re) CFO from approximately June 2000 through July 2003, and her co-defendants, Ronald Ferguson, Robert Graham and Christopher Garand, all former Gen Re executive officers, and Christian Milton, AIG's VP of reinsurance, engaged in a scheme to falsely inflate AIG's reported loss reserves, a key indicator of financial health to insurance industry analysts and investors.

According to trial evidence, the fraud was carried out through the use of two sham reinsurance transactions between subsidiaries of AIG and Gen Re in response to analysts' criticism of a $59 million decrease in AIG's loss reserves for the third quarter of 2000.