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Elizabeth A. Monrad, former Gen Re CFO, was sentenced last month to 18 months in federal prison for her role in a sham insurance scheme involving AIG. U.S. District Court Judge Christopher F. Droney, Hartford, Conn, also sentenced Monrad to 3 years’ probation and fined her $250,000. Monrad was found guilty in February 2008 of conspiracy, securities fraud, making false statements to the U.S. Securities and Exchange Commission and mail fraud. Monrad and four others were convicted of creating two sham insurance deals that inflated AIG’s earnings. 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. An investigation forced AIG to restate its earnings in 2005, costing shareholders more than $500 million. Others sentenced include Ronald E. Ferguson, Gen Re’s former CEO; Robert D. Graham, former Gen RE senior vice president and assistant general counsel; and Christian M. Milton, vice president of reinsurance at AIG. A fifth defendant, Christopher P. Garand, former senior vice president and chief underwriter of the company’s finite reinsurance operations in the United States, is still awaiting sentencing.

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