Five former executives of American International Group Inc. and Berkshire Hathaway Inc. unit General Reinsurance have admitted to conducting a fraudulent reinsurance transaction 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 settlement brings to an end a high-profile case that has worked its way through the courts since May 2006.
In 2008, former Gen Re Chief Executive Ronald Ferguson, Chief Financial Officer 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 trial judge in the case. The five had been sentenced to anywhere from one to four years in prison. Last February, a new judge overseeing the case set a January 2013 date for their retrial. When you consider what these individuals did and now have admitted to, their punishment doesn’t appear to be very severe.
Source: Insurance Journal
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