A Connecticut woman who played a role in massive fraud that misled AIG investors will be going to prison.
Elizabeth Monrad, 54, of the posh town of New Canaan, will serve 18 months in prison. After that, she will be on supervised release for three years and she’s being fined $250,000.
She is one member of a group of General Re Corp. execs convicted of actions to manipulate financial statements between her company and AIG, according to Nora R. Dannehy, Acting United States Attorney for the District of Connecticut. Yes, that AIG, as in New York-based American International Group.
Prosecutors said AIG had a secret deal with Stamford-based Gen Re. Gen Re took out reinsurance (insurance on insurance) policies with AIG in 2000 and 2001 to prop up AIG's stock prices and inflate reserves by $500 million. This info is an important indicator of financial health to insurance industry analysts and investors.
Monrad, Ronald Ferguson, Robert Graham and Christopher Garand and Christian Milton, used two sham reinsurance (that’s insurance for insurance) transactions between subsidiaries of AIG and Gen Re in response to analysts’ criticism of a $59 million decrease in AIG’s loss reserves for the third quarter of 2000, Dannehy said.
The execs also had a secret side deal, Dannehy said. AIG would never have to pay any losses under the contracts; AIG would return to Gen Re the $10 million in premiums Gen Re paid to AIG and AIG paid Gen Re a $5 million fee for entering into the transaction.
- Ronald Ferguson, Gen Re’s chief executive officer from approximately 1987 through September 2001, was sentenced to two years in prison and ordered to pay $200,000.
- Christian Milton, AIG’s vice president of reinsurance, was sentenced to four years in prison and fined $200,000.
- Christopher Garand, Gen Re’s senior vice president and the head and chief underwriter of Gen Re’s finite reinsurance operations in the U.S., was sentenced to 12 months and one day of imprisonment and fined $150,000.
- Robert Graham, who was Gen Re’s senior vice president and assistant general counsel, has not yet been sentenced.