A major actuarial group has issued a statement disavowing efforts by some of its members to secure a lenient sentence for Ronald Ferguson, the former General Reinsurance chief executive convicted for his role in a reinsurance accounting fraud.
In addition, the Web site announcement by the Casualty Actuarial Society board of directors said they have asked for a conduct investigation of Mr. Ferguson and one of his co-defendants, Christopher Garand, both of whom are CAS members.
The CAS announcement indicates that Mr. Ferguson is the subject of a letter signed by some CAS members sent to U.S. District Court Judge Christopher Droney in Hartford, Conn., who has yet to set a sentence date for Mr. Ferguson.
Mr. Ferguson faces up to 20 years in prison on the most serious charges, but court advisory guidelines typically call for shorter terms.
The GenRe CEO and four other insurance executives were convicted in February of charges including conspiracy, securities fraud, mail fraud and making false statements to the Securities and Exchange Commission for their role in developing a phony reinsurance transaction designed to falsely improve American International Group’s financial picture and make its loss reserves look better to securities analysts.
In addition to disavowing the letter to the judge, the actuarial society said it “was not sanctioned by the CAS and is not an official statement of the CAS or the CAS Board. It represents the personal opinions of those who signed it.”
The text of the letter and its signers’ names have not been released by Judge Droney.
The Society said it has asked the Actuarial Board for Counseling and Discipline to investigate if Mr. Ferguson and Mr. Garand, a former GenRe senior vice president, violated the actuarial Code of Professional Conduct.
A spokesperson for the Actuarial Board said sanctions for violating the code can range from a private reprimand to expulsion or suspension from the CAS.
In addition to Mr. Garand, Mr. Ferguson’s other co-defendants were Elizabeth Monrad, former GenRe chief financial officer; former GenRe assistant general counsel Robert Graham; and Christian Milton, AIG’s former head of reinsurance.
Last week the judge dismissed their motion for a new trial in a decision that said that while AIG appeared to take on $100 million in risk through a finite reinsurance deal, in fact “there was no risk transferred to AIG.”
Defendants, he noted, created a fake offer letter through which GenRe falsely appeared to solicit the deal from AIG. But he wrote that, in fact, then AIG chairman and CEO Maurice Greenberg, who was an unindicted co-conspirator in the case, “initiated the transaction through his Oct. 31, 2000 telephone call to Ferguson.”
Last week, Mr. Greenberg was notified by the Securities and Exchange Commission that it was considering civil action against him.
The government took no action against Warren Buffett, chairman of Berkshire Hathaway, the holding company that contains GenRe, who was said to have had some discussion of the deal with AIG.
Mr. Buffett was listed as a potential government witness by prosecutors, but never called.