Jury Convicts Former Gen Re and AIG Execs, Appeal on the Way
A U.S. jury on Monday convicted four former executives of the General Re Corp unit of Berkshire Hathaway Inc and a former executive of American International on corporate fraud and conspiracy charge in connection with a reinsurance deal that prosecutors said misled AIG investors because it enabled the company to improperly inflate its loss reserves, painting an artificially bright picture of its financial results.
Convicted in the case were Ronald Ferguson, former Gen Re chief executive; Elizabeth Monrad, Gen Re's former chief financial officer; Robert Graham, former Gen Re senior vice president and assistant general counsel, and Christopher Garand, a former Gen Re senior vice president and head of its finite reinsurance operations in the United States.
Christian Milton, AIG's former vice president of reinsurance, was also found guilty.
Ferguson, Monrad, Graham and Milton face maximum prison terms of 210 years each, while Garand faces a maximum term of 150 years, said Thomas Carson, a spokesman for the U.S. Attorney's office in Connecticut, which prosecuted the case. They also face a fine of up to $46 million. Garand faces a fine of up to $29 million.
One of Mr. Ferguson’s lawyers, Clifford Schoenberg, issued a statement expressing outrage at the verdict and at the prosecution itself, calling the government’s decision to pursue the case a “terrible travesty.”
“The fact that the prosecutors somehow pulled the wool over the eyes of a jury who had no conversancy with the arcane vocabulary and customs and practices of the reinsurance industry is deeply disturbing,” Mr. Schoenberg, who is with Cadwalader, Wickersham & Taft L.L.P., said in the statement.
“We can only hope that Judge Droney or the court of appeals will reverse this grave miscarriage of justice,” Mr. Schoenberg said.
“There will definitely be an appeal,” said Mr. Milton’s lawyer, Frederick Hafetz of Hafetz & Necheles. “We believe there are substantial issues dealing with fairness of a trial in multiple-defendant cases.”
Published on February 26, 2008
Are you a retail Agent Looking for a Quote?