Final Defendant In Gen Re Case Sentenced To Jail (Update 1)

By Diane Bartz
April 30, 2009

WASHINGTON, April 30 (Reuters) - A fifth defendant in a criminal case involving fraudulent statements made to American International Group Inc (AIG.N) investors about the insurer's finances was sentenced to prison on Thursday.

Robert Graham, 61, was sentenced to 12 months and one day in prison and ordered to pay a $100,000 fine, the U.S. attorney in Connecticut said in a statement.

He was the final defendant in the case to be sentenced.

Graham, a former assistant general counsel at Berkshire Hathaway Inc's (BRKa.N) General Re unit, was convicted of conspiracy, securities fraud, mail fraud and making false statements to the U.S. Securities and Exchange Commission.

The case is unrelated to AIG's current financial distress. The company posted a record $61.7 billion quarterly loss last month and has received nearly $180 billion in government aid to date.

Prosecutors said Graham and four others harmed AIG shareholders through sham transactions that allowed the insurer to improperly boost loss reserves by $500 million in 2000 and 2001. AIG restated the transactions in 2005.

AIG acknowledged accounting improprieties and restated $3.9 billion in earnings from 2000 through 2004, and agreed to a $1.64 billion regulatory settlement in 2006.

The matter led to the 2005 ouster of AIG's longtime chief executive, Maurice "Hank" Greenberg.

Another defendant, former General Re finance chief Elizabeth Monrad, was sentenced to 18 months in prison and fined $250,000 on April 2.

Christian Milton, a former AIG vice president of reinsurance, was sentenced in January to four years in prison, while former General Re CEO Ronald Ferguson was sentenced in December to two years in prison. Another General Re executive, Christopher Garand, was sentenced to one year in prison.

In February, General Re agreed to pay $72 million to settle investor claims about its role in a fraudulent transaction involving AIG. The settlement requires approval by a federal judge in Manhattan.

AIG paid $1.6 billion in 2006 to settle civil charges brought by Eliot Spitzer, then the New York attorney general, in connection with alleged accounting improprieties involving the Gen Re transactions.

Copyright © 2009 FBIC (

Click here to return to FBIC homepage