Gen Re Exec Garand Gets Prison Time

Convicted former Gen Re executive Christopher P. Garand was sentenced to serve a year and a day in prison on his conviction of being involved in a scheme to manipulate American International Group's financial statement.

In addition to his prison sentence, the former senior vice president and assistant general counsel also was sentenced today to serve two years of supervised release and pay a $150,000 fine by Federal District Court Judge Christopher F. Droney, sitting in Hartford, Conn.

Mr. Garand, along with four others, was convicted in February 2008 of 16 counts that included conspiracy, securities fraud, making false statements to the Securities and Exchange Commission, and mail fraud.

The five executives were convicted of a scheme between General Re Corp. 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.

Christian Milton, formerly vice president of reinsurance for AIG, and the only AIG executive found guilty in the scheme, received the harshest sentence so far of four years in prison, two years probation and a $200,000 fine.

Ronald E. Ferguson, Gen Re's chief executive officer, received two years in prison, two years probation and a $200,000 fine.

Elizabeth Monrad, Gen Re's chief financial officer, and Robert Graham, a Gen Re senior vice president and assistant general counsel, still await sentencing.

According to the U.S. Attorney's Office for Connecticut, Ms. Monrad and Mr. Graham face a maximum of 210 years in prison and a fine of up to $46 million. Mr. Ferguson and Mr. Milton faced the same.

Mr. Garand faced a maximum prison term of 150 years and up to $29.5 million fine.