Posted on 09 Sep 2008
Five former General Re Corp. and American International Group Inc. executives convicted of fraud earlier this year have received recommended prison sentences of 14 to 17.5 years from federal probation officials, yet federal prosecutors are arguing for stiffer prison terms.
Prosecutors argued that AIG shareholders lost as much as $1.4 billion as a result of a fraudulent $500 million loss portfolio transfer deal between Gen Re and AIG in 2000, and that the five defendants' sentences should be longer than recommended. Probation officials incorrectly concluded that the loss caused by the deal could not be reasonably calculated in deciding on a recommended sentencing range of 168 to 210 months, prosecutors contended.
Convicted of various conspiracy, securities fraud and mail fraud charges in February were former Gen Re Chief Executive Officer Ronald E. Ferguson; former Gen Re Chief Financial Officer Elizabeth Monrad; Robert Graham, a former Gen Re senior vp and associate general counsel; Christopher Garand, a former senior vp for finite reinsurance for Gen Re; and Christian M. Milton, a former senior vp with AIG.
Prosecutors charged that the five defendants knew that the loss portfolio deal was a sham designed to inflate AIG's loss reserves by $500 million to placate stock market analysts.
In their own separate filings, attorneys for the defense disputed the prosecutors' arguments, with the 61-year-old Mr. Garand's lawyers objecting that the government is seeking what amounts to a life sentence for their client.
A hearing on sentencing issues will take place later this month.