Four former executives of re-insurer General Re and one former executive of insurer American International Group were convicted by a jury of fraud and conspiracy for manipulating financial statements.
The five-week trial was one of the most significant convictions in an accounting case since Enron and WorldCom. After nine days of deliberations, the defendants were convicted on 16 charges, including mail fraud, securities fraud, conspiracy and lying to the Securities and Exchange Commission.
They included Ronald E. Ferguson, former CEO of General Re; Elizabeth A. Monrad, General Re's CFO; Robert Graham, General Re's former senior vice president and assistant general counsel; Christopher P. Garand, General Re's former senior vice president; and Christian Milton, former vice president of AIG's reinsurance business.
The defendants face maximum terms of 20 years on the most serious charges. Sentencing is scheduled for May 15. Many of them plan to appeal their convictions.
They were blamed for questionable transactions between AIG and its reinsurer General Re that allowed AIG to claim that it boosted its loss reserves by $500 million in 2000 and 2001. In 2006, AIG agreed to pay $1.6 billion to federal and state regulators to settle charges of improper accounting and bid rigging.
The trial included testimony about AIG's former CEO, Maurice "Hank" Greenberg, who ran the company at the time of the dubious transactions and was described as an unindicted co-conspirator by prosecutors.
Another prominent figure was billionaire investor Warren Buffett, whose company Berkshire Hathaway owns General Re. Buffett approved the deal's reputational risk but he is considered to be more tangentially connected to the questionable transactions and was not aware of any secret side deals, according to prosecutors. Neither he nor Greenberg have been charged, and both have denied any wrongdoing.
