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Former General Re Execs Face Fraud Retrial in January 2013

Posted on 01 Mar 2012

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Four former executives at General Reinsurance Corp. and one at American International Group Inc. (AIG) face a Jan. 22 retrial on charges of defrauding AIG investors of as much as $597 million.

U.S. District Judge Vanessa Bryant will preside over the trial in Hartford, Connecticut, according to an order made public yesterday. On Aug. 1, the U.S. Court of Appeals in New York ordered a new trial, reversing the executives’ convictions in 2008.

Federal jurors in Hartford convicted former General Re Chief Executive Officer Ronald Ferguson, ex-Chief Financial Officer Elizabeth Monrad, ex-Senior Vice President Christopher Garand and ex-Assistant General Counsel Robert Graham. Former AIG Vice President Christian Milton also was found guilty.

Prosecutors said the fraud involved a sham transaction in 2000 and 2001 to inflate AIG’s loss reserves by $500 million. It preceded the financial crisis of New York-based AIG, which got a bailout of $182.3 billion from U.S. taxpayers. The appeals court said the trial judge at the time, Christopher Droney, erroneously let prosecutors show jurors three charts with AIG stock-price data. Droney has since joined the appeals court.

Droney also erred by improperly instructing the jury on causation, according to the appeals court opinion.

He had sentenced Milton to four years in prison, Ferguson to two years, Monrad to 18 months, and Garand and Graham each to one year. They are free on bail pending appeal. Two General Re executives who pleaded guilty testified as prosecution witnesses and were sentenced to probation.

Bryant’s order set a schedule for prosecutors and defense lawyers, including a pretrial conference on Dec. 3 and jury selection on Jan. 3.