Our firm has handled a number of civil actions against Berkshire Hathaway’s General Re insurance unit and American International Group (AIG). As a result, we have had access to a great deal of information relating to fraudulent activities by these companies. Recently, three former executives at General Re insurance unit and a former American International Group executive were indicted by a federal grand jury on fraud charges. The Indictments were returned by a grand jury in Alexandria, Virginia, charging the former executives with being part of a conspiracy to make AIG’s finances appear better than they were. Those charged are: Ronald Ferguson, who was General Re’s chief executive; Elizabeth Monrad, the former chief financial officer; Robert Graham, the company’s former assistant general counsel; and Christian Milton, who ran AIG’s reinsurance division. The indictments were first reported in the Wall Street Journal and were picked up by the Associated Press.
The indictments stem from Justice Department and Securities and Exchange Commission investigations of a 5-year-old deal between the two companies, major players in the reinsurance industry, which provides insurance to insurers. Prosecutors have said that AIG had been concerned about insufficient reserves to cover potential losses and approached Gen Re to facilitate a deal that would increase its loss reserves on paper. Based on what we have learned in one of our civil cases, the deal had no substantive value and was designed strictly to cosmetically alter AIG’s books. Gen Re received a $5.2 million fee to arrange the sham transactions. You will recall that two former Gen Re executives, Richard Napier and John Houldsworth, pleaded guilty last year to their roles in the sham transaction. As part of a plea bargain, Houldsworth is now aiding the investigation.
Source: Wall Street Journal and Associated Press
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