Hartford, Conn. — After a month-long trial in federal court that included six days of complex deliberations, five former insurance company executives were found guilty last week of taking part in a plan to manipulate the financial statements of American International Group Inc. (AIG).
The defendants include former General Re Corp. CEO Ronald Ferguson; former General Re SVP Christopher Garand; former General Re CFO Elizabeth Monrad; and Robert Graham, a General Re SVP and assistant general counsel from about 1986 through October 2005. Christian Milton, AIG's VP of reinsurance from about April 1982 until March 2005, also was charged.
The executives are accused of fraudulent reinsurance transactions that increased AIG's reserves and artificially boosted its stock price. AIG is the world’s largest insurer and Gen Re’s largest client.
The jury of nine men and three women reviewed countless documents and complex accounting principles during its deliberations.
Convicted on all 16 charges, including conspiracy, securities fraud, mail fraud and lying to the Securities and Exchange Commission, the defendants were unmoved as they heard the verdict. Sentencing is scheduled for May 15.
Ferguson, Monrad, Milton and Graham each face up to 230 years in prison and a fine of up to $46 million. Garand faces up to 160 years in prison and a fine of up to $29.5 million.
AIG is not unfamiliar with charges of improper accounting. Elliott Spitzer, now governor of New York, was among the first to bring charges against the insurer back in 2005. But the verdict does leave some unanswered questions, such as whether the verdicts will have any impact on Warren Buffett, the investor who runs Berkshire Hathaway Inc., which owns General Re, or on Maurice “Hank” Greenberg, former chief executive of AIG. Both have adamantly denied any wrongdoing.
Now 82, Greenberg lead the company during the transaction period in question. Greenberg left AIG in 2005 after 37 years. Currently, Greenberg is also a plaintiff in a legal battle against AIG.
U.S. attorney Eric Glover said in a statement that the government’s investigation “is continuing” but did not provide further details.
Source: AP Online, Reuters
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