A Westport man was among four former top executives of insurance companies General Re and American International Group (AIG) who pleaded not guilty to federal fraud and conspiracy charges Thursday in Alexandria, Va., and pledged $1 million in bond.
Their trial was set for May.
The Westporter, Robert D. Graham, 57, a former senior vice president and assistant general counsel of Stamford-based General Re, 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 has accused the four 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 say.
In addition to Graham, those appearing in federal court in Alexandria included Ronald Ferguson, who was chief executive of Berkshire Hathaway’s General Reinsurance; Elizabeth Monrad, its former chief financial officer; and Christian Milton, who ran the reinsurance division of AIG.
By turns, they stood before U.S. District Judge Gerald Bruce Lee and replied, “Not guilty” when asked how they were responding to the charges. They also said they wanted a jury trial rather than a hearing with only a judge.
Each pledged a $1 million bond and surrendered his or her passport. Lee set a trial date of May 22.
Each defendant, if convicted on all 13 criminal counts of conspiracy, fraud and making false statements to the Securities and Exchange Commission, could face a maximum of 95 years in prison and $7.75 million in fines.
At the time of Graham’s indictment Feb. 2, his attorney, Alan Vinegrad, said his client “is an attorney of the highest integrity … He looks forward to having his day in court and expects to be vindicated at trial.” (See WestportNow Feb. 2, 2006)
