Defense lawyers for five insurance executives charged with participating in an American International Group transaction that hyped the insurer's financial results rested their case today without any of their clients taking the stand.
Final arguments in the case are expected to be held on Monday. U.S. District Court Judge Christopher Droney today denied motions to dismiss charges against one defendant and to quash a variety of evidence.
Before closing, the defense put on a handful of character witnesses.
On trial are Ronald Ferguson (former chief executive officer of General Reinsurance), Christopher Garand (a former Gen Re senior vice president), Christian Milton (former AIG vice president for reinsurance), Robert Graham, (Gen Re's former senior vice president and counsel) and Elizabeth Monrad (Gen Re's former chief financial officer).
The five are facing charges that include conspiracy, securities fraud, false statements to the SEC, wire fraud and mail fraud for activities in 2000 and 2001.
According to the government, a sham reinsurance transaction between AIG and Gen Re subsidiary Cologne Re Dublin was concocted by the group in order to artificially boost AIG loss reserves by $500 million in the last quarter of 2000 and first quarter of 2001.
Billionaire investor Warren Buffet, the chairman of Berkshire Hathaway, the Gen Re parent firm, had been listed as a government witness to rebut any inference that he approved the deal, but he was never called.
According to testimony at the trial, the genesis of the transaction came from former AIG Chairman and CEO Maurice Greenberg, an unindicted coconspirator in the case who was forced from his post after investigators began looking at the transaction.
In 2005, AIG issued a financial restatement that reduced its net income between 2000 and 2004 by $3.92 billion, while trimming shareholder equity as of Dec. 31, 2004, by $2.26 billion. AIG and Mr. Greenberg are embroiled in lawsuits over that action.
The judge yesterday rejected a defense motion to exclude statements related to unindicted co-conspirators, including e-mail exchanges and government witnesses' recollections of conversations.
He also denied a motion for dismissal by Michael Horowitz, the attorney for Mr. Ferguson, who argued that the former Gen Re CEO had no knowledge that the deal was a no-risk transaction for AIG.
Among the defense witnesses presented yesterday was a friend of Ms. Monrad–Barbara Reiniger, of Darien, Conn.–who said she knew the defendant as a Sunday school teacher at their local Episcopal church, who had sheltered her teenage daughter when she became a runaway.
She said she trusted her daughter with Ms. Monrad because she is a person of the “highest possible integrity” and a woman of her word.
Robert Lhulier of Middletown, Del., testified he considered Mr. Graham an ethical and honest person. He said he knew him as a sailing chum and someone who was active in Delaware politics.
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