Prison and fine for AIG reinsurance sham
Former General Re chief executive Robert Ferguson has been sentenced to two years in prison and fined $200,000 for helping AIG inflate its financial statements.
Ferguson and four other insurance executives were convicted in February on charges of conspiracy, securities fraud, mail fraud and false statements to the Securities and Exchange Commission.
Prosecutors said Ferguson and others facilitated two sham reinsurance transactions in 2000 and 2001 that allowed AIG to falsely inflate its reserves by $500m.
A federal judge in Connecticut found that AIG shareholders lost between $544m and $597m because of the fraud. AIG restated the transactions in 2005.
“This transaction was designed to cook the books of AIG. He had many opportunities to step in and stop the deal but he did not,” District Judge Christopher Droney said of Ferguson.
The case is not linked to AIG's mortgage-related losses that led to a near collapse of the company in September and a federal bailout.
General Re is a unit of Warren Buffet's Berkshire Hathaway.