NEW YORK (Reuters) - A U.S. jury convicted four former executives of the General Re Corp unit of billionaire Warren Buffett’s Berkshire Hathaway Inc (BRKa.N)(BRKb.N) and a former executive of American International Group Inc (AIG.N) on corporate fraud and conspiracy charges on Monday, the Justice Department said.
The five were convicted at federal court in Hartford, Connecticut in connection with a reinsurance deal that prosecutors said misled AIG investors because it enabled the company to improperly inflate its loss reserves, painting an artificially bright picture of its financial results.
Convicted in the case were Ronald Ferguson, former Gen Re chief executive; Elizabeth Monrad, Gen Re’s former chief financial officer; Robert Graham, former Gen Re senior vice president and assistant general counsel, and Christopher Garand, a former Gen Re senior vice president and head of its finite reinsurance operations in the United States.
Christian Milton, AIG’s former vice president of reinsurance, was also found guilty.
Ferguson, Monrad, Graham and Milton face maximum prison terms of 210 years each, while Garand faces a maximum term of 150 years, said Thomas Carson, a spokesman for the U.S. Attorney’s office in Connecticut, which prosecuted the case. They also face a fine of up to $46 million. Garand faces a fine of up to $29 million.
Ronald Ferguson plans to appeal the verdict, his lawyer, Clifford Schoenberg, said by telephone from Hartford.
“This is a very sad day — not only for Ron Ferguson, but for our criminal justice system,” Schoenberg said. “(We) will not rest until we see him — and justice — vindicated.”
Milton’s lawyer, Frederick Hafetz, said his client was “denied a fair trial and his case should have been severed from the co-defendants.”
The judge set a sentencing date of May 15 for all defendants.
“The case is a terrible tragedy for Bob Graham. He is obviously disappointed at the verdict and we will continue to fight vigorously on his behalf,” said his attorney Alan Vinegrad.
Lawyers for other defendants could not immediately be reached for comment.
At the center of the case was a finite reinsurance transaction that prosecutors said allowed AIG to improperly boost its loss reserves by $500 million in 2000 and 2001.
AIG previously 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 long-time chief executive, Maurice “Hank” Greenberg, who is an unindicted alleged co-conspirator in the government’s case. Greenberg has denied wrongdoing.
A spokeswoman for Berkshire Hathaway was not immediately available for comment on Monday and an AIG spokesman said the company had no comment on the guilty verdict.
AIG’s shares rose 3 percent to close at $50.38. Berkshire shares were up 0.22 percent.
Reporting by Lilla Zuill, Martha Graybow, Jonathan Stempel in New York and Randall Mikkelsen in Washington; Editing by Brian Moss; Editing by Andre Grenon