Christian Milton, a former vice president of American International Group, was sentenced last week to four years in prison in connection with a scheme to manipulate the company's financial statement through a bogus finite reinsurance deal with General Reinsurance Corp.

Mr. Milton--who was found guilty of conspiracy, securities fraud, making false statements to the Securities and Exchange Commission, and mail fraud--was sentenced to serve four years on each count by Federal District Court Judge Christopher F. Droney, sitting in Hartford. The sentence is to run concurrently, according to a representative for the U.S. Attorney's Office.

In addition to prison, Mr. Milton was sentenced to serve two years of supervised release and pay a fine of $200,000.

Mr. Milton was one of five executives convicted for a scheme between Gen Re and AIG to inflate AIG's earnings with two sham reinsurance transactions. The deal increased AIG's loss reserves by $250 million in the fourth quarter of 2000, and $250 million in the first quarter of 2001, masking declines in loss reserves.

After investigators uncovered the activity, AIG restated its earnings, costing shareholders more than $500 million.

Mr. Milton was the only AIG executive convicted. The remaining four were Ronald Ferguson, Gen Re's chief executive officer at the time of the deal; Elizabeth Monrad, Gen Re's chief financial officer; Robert Graham, a Gen Re senior vice president and assistant general counsel; and Christopher Garand, Gen Re senior vice president and chief underwriter of finite re operations.

In December, Judge Droney sentenced Mr. Ferguson to two years in prison, two years of supervised service and a $200,000 fine. Sentencing is pending for the others.

Special Reports /

Milton Sentenced To Four Years In AIG-Gen Re Financial Scheme

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