Guilty Verdict for 5 Former CEO’s in AIG Scheme

February 27, 2008

(Long Island, N.Y.) After seven days of deliberation by a jury in Hartford Connecticut, five former insurance company CEO’s where found guilty and convicted of conspiracy, mail fraud, securities fraud and making false statements to the Securities and Exchange Commission which could carry a penalty of up to 230 years in prison and over $46 million in fines.

The Five defendants are Ronald Ferguson a former General Re CEO, Ex-General Re vice President Christopher P. Garand, Former General Re Chief Financial Officer Elizabeth Monrad, Robert Graham who previously held the distinction as the vice president and assistant general counsel for General Re and Christian Milton who served as AIG’s vice president of reinsurance from April 1982 to March 2005.

Prosecutors charged the five defendants with conspiracy to create fraud after gaining enough evidence in the case, mostly of which were paperwork from the two companies where authorities now believe the five accused falsified to create a side deal between Gen Re and AIG. Under the agreement, AIG would pay Gen Re a specified amount of cash for Gen Re to take out re-insurance policies together with AIG which would pump up AIG’s stock price and inflating reserves by over $500 million.

“The case sends the message to executives that their decisions will be scrutinized, and these types of offenses aren’t just speeding tickets that you can pay,” prosecutor Paul Pelletier told reporters after the verdict was read.

The defendants remained calm throughout the reading of the verdict and declined to comment after the hearing. Four of the defendants Ferguson, Milton, Graham and Monrad could face jail time of up to 230 years with $46 million in penalty while Christopher Garand faces an incarceration of over 160 years with $29 million in penalty.

“This is a very sad day, not only for Ron Ferguson, but for our criminal justice system,” Clifford Schoenberg, Ferguson’s personal attorney, said in a statement distributed at U.S. District Court in Hartford. “I and the rest of Ron’s legal team will not rest until we see him — and justice — vindicated.”

General Re is one of the world’s biggest reinsurance companies and is a subsidiary of Berkshire Hathaway Corporation which is a holding’s company run by business tycoon Warren Buffet. AIG or American International Group Inc. is one of the major Insurance corporations in America and is one of the components of Dow Jones Industrial at Wall Street. The company is based in New York.

Posted by News LI Editor · Edited by Brianna - Filed Under Society