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Tuesday, February 26, 2008

Westporter and Four Others Found Guilty in Fraud Trial

A federal jury in Hartford has found four former General Re Corporation (Gen Re) executives, including a former Westport Board of Finance member, along with one former American International Group Inc. (AIG) executive, guilty of fraud following a five-week long trial, the Justice Department announced today. WestportNow.com Image
Robert Graham: Found guilty. WN file photo

The jury returned a verdict of guilty on all charges against all defendants contained in a 16-count superseding indictment stemming from a fraudulent scheme to manipulate AIG’s financial statements, the department said.

Robert Graham, 59, of Westport, a Gen Re senior vice president and assistant general counsel employed by Gen Re from about 1986 through October 2005, was found guilty on charges of conspiracy, securities fraud, false statements to the SEC, and mail fraud, a news release said.

Graham served as a Republican member of the Westport Planning and Zoning Commission from 1995 to 1999 and was on the Board of Finance from 1999 to 2003.

The Justice Department accused Graham and the others of orchestrating an audacious fraud, putting together a sham reinsurance transaction that allowed AIG to falsely report some $500 million in reserves against losses and thereby mislead shareholders, Wall Street and regulators. 

The alleged conspiracy, using phony contracts and a secret side deal, was designed to make it appear that AIG’s loss reserves were growing so as to inflate the company’s stock price in 2000 and 2001, prosecutors said.

Jurors, who began hearing evidence Jan. 7, deliberated six days .The defendants face maximum terms of 20 years on the most serious charges. Advisory guidelines typically call for lesser terms.

Sentencing is set for May 15. Each defendant is free on $1 million bond.

Graham, a Westport resident for two decades, served for three years as a lawyer with the Delaware Department of Justice where he represented financial and budgeting agencies. He later practiced as an attorney representing financial service companies before joining General Re.

Graham’s attorney Alan Vinegrad said the case is a “terrible tragedy’’ for his client, who “obviously is disappointed. We will continue to fight vigorously on his behalf.’‘

Others convicted include:

Ronald E. Ferguson, 63, of Fairfield, Gen Re’s chief executive officer from about 1987 through September 2001, found guilty on charges of conspiracy, securities fraud, false statements to the SEC, and mail fraud, the news release said.

Elizabeth Monrad, 51, of New Canaan, Gen Re’s chief financial officer from about June 2000 through July 2003, found guilty on charges of conspiracy, securities fraud, false statements to the SEC, and mail fraud, according to prosecutors.

Christopher P. Garand, 59, of Upper Saddle River, N.J., a Gen Re senior vice president and the head and chief underwriter of Gen Re’s finite reinsurance operations in the United States from about 1994 until August 2005 and also a member of the Board of Directors of Cologne Re Dublin, a Gen Re entity, found guilty on charges of conspiracy, securities fraud, false statements to the SEC, and mail fraud, the release said.

Christian Milton, 58, of Winnewood, Pa., AIG’s vice president of reinsurance from about April 1982 until March 2005, found guilty on charges of conspiracy, securities fraud, false statements to the SEC, and mail fraud, according to the release.

“These convictions continue the string of successes in our crackdown on corporate fraud and our effort to restore integrity to our financial markets,” said
Acting Deputy Attorney General Craig Morford, chairman of the President’s Corporate Fraud Task Force.

“The investing public must be able to trust and rely upon corporate management to provide accurate information in their public filings,” said Assistant Attorney General Alice S. Fisher of the Criminal Division.

“As these convictions demonstrate, executives who violate the criminal laws by deceiving investors or aiding in that deception will be held accountable.”

“We’re very pleased with the jury’s verdict, as it sends the appropriate message that those who engage in corporate wrongdoing will be held accountable,” said U.S. Attorney Kevin J. O’Connor of the District of Connecticut.

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Posted 02/26/08 at 03:29 AM  Permalink



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