NU Online News Service, April 30, 3:50 p.m. EDT
Robert D. Graham, the former General Re Corp. attorney convicted with four other insurance executives in a scheme to manipulate American International Group financial statements, was sentenced in federal court today to a year in prison and two years probation.
Mr. Graham, 61, of Westport, appeared before U.S. District Court Judge Christopher F. Droney in Hartford Conn., who also ordered the defendant to pay a $100,000 fine.
He was convicted Feb. 25, 2008, of conspiracy, securities fraud, false statements to the U.S. Securities and Exchange Commission, and mail fraud charges.
Mr. Graham, who was a senior vice president and assistant general counsel at Gen Re, was convicted with former Gen Re Chief Executive Officer Ronald E. Ferguson, Gen Re Chief Financial Officer Elizabeth A. Monrad, Gen Re Senior Vice President for U.S. Underwriting Christopher P. Garand, and Christian M. Milton, AIG's vice president of reinsurance.
They were found guilty of falsely inflating AIG's reported loss reserves using two sham reinsurance transactions between subsidiaries of AIG and Gen Re after analysts' criticized a $59 million decrease in AIG's loss reserves for the third quarter of 2000.
On Oct. 31, 2008, Judge Droney found that AIG's shareholders lost between $544 million and $597 million as a consequence of the defendants' fraudulent scheme.
The defendants, according to trial evidence, structured a sham reinsurance transaction and created a phony paper trail to make it appear as though Gen Re had solicited reinsurance from AIG when they knew AIG wanted the transaction to manipulate its financial statements.
According to testimony, defendants entered into a secret side deal whereby AIG would never have to pay any losses under the contracts; AIG would return to Gen Re the $10 million in premiums Gen Re paid to AIG and AIG paid Gen Re a $5 million fee for entering into the transaction.
Mr. Ferguson, was sentenced to two years in prison Mr. Milton to four years, Mr. Garand to one year, and Ms. Monrad to 18 months. All were fined as well.
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