WASHINGTON – Three former executives at Berkshire Hathaway's (BRK-A) General Re insurance unit and a former American International Group (AIG) executive have been indicted by a federal grand jury on fraud charges, a Justice Department official said Thursday.
Indictments were returned Wednesday by a grand jury in Alexandria, Va., charging the former executives with being part of a conspiracy to make AIG's finances appear better than they were, the official said.
Those charged are: Ronald Ferguson, who was General Re's chief executive, Elizabeth Monrad, the former chief financial officer, Robert Graham, the company's former assistant general counsel and Christian Milton, who ran AIG's reinsurance division, the official said on condition of anonymity because the indictments were not yet publicly available. The indictments were first reported Thursday in the Wall Street Journal.
The indictments stem from Justice Department and Securities and Exchange Commission investigations of a 5-year-old deal between the two companies, major players in the reinsurance industry, which provides insurance to insurers.
Prosecutors have said that AIG had been concerned about insufficient reserves to cover potential losses and approached Gen Re to facilitate a deal that would increase its loss reserves on paper.
But the deal had no substantive value and was designed to cosmetically alter AIG's books, according to court documents. Gen Re received a $5.2 million fee to arrange the sham transactions.
Another former Gen Re executive, John Houldsworth, pleaded guilty last year to his role in the sham transaction. As part of a plea bargain, he is aiding the investigation.