Former AIG, Gen Re Execs Admit to Fraud, Pay Fines

Five former executives of American International Group Inc and Berkshire Hathaway Inc unit Gen Re admitted to conducting a fraudulent reinsurance transaction on June 22 as part of a deal to end a years-long criminal case against them.

All five entered into deferred prosecution agreements, meaning their indictments will be dismissed in a year if they stay out of trouble. They also agreed to fines ranging from $100,000 to $250,000. The deal brings to an end a high-profile case that has worked its way through the courts since May 2006.

In 2008, former Gen Re CEO Ronald Ferguson, CFO Elizabeth Monrad, Senior Vice President Christopher Garand and Assistant General Counsel Robert Graham, as well as AIG Vice President Christian Milton, were convicted of engineering a reinsurance deal to fraudulently boost AIG’s reserves. In August 2011, a federal appeals court threw out the convictions and ordered a new trial, citing errors by the judge in the case. The five had been sentenced to anywhere from one to four years in prison, though they were all out on bail, pending their appeals. Last February, a new judge overseeing the case set a January 2013 date for their retrial.