Securities Fraud Charges Fly For Executives With A Recipe To Cook The Books
Thursday, February 02, 2006PAUL KANGAS: In Washington today, four top insurance executives at two big insurance companies were indicted on securities fraud charges. Three former executives of General Re, part of Berkshire Hathaway and one from American International Group allegedly conspired to cook the books at AIG. Washington bureau chief Darren Gersh reports.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Justice Department officials allege former top executives at insurance giant General Re helped AIG engineer sham transactions that defrauded investors.
ALICE FISHER, ASSISTANT ATTORNEY GENERAL: These transactions were undertaken for the sole purpose of falsifying AIG`s books to create the impression that AIG was in better financial shape than it actually was.
GERSH: The 13 count indictment charges former Gen Re CEO Ronald Ferguson, former CFO Elizabeth Monrad and former Assistant General Counsel Robert Graham with conspiring to commit fraud with former AIG reinsurance head Christian Milton. Also today, the Securities and Exchange Commission announced civil charges against the executives as well as former Gen Re senior Vice President Christopher Garand. It was New York Attorney General Eliot Spitzer who first took on the insurance industry, ultimately forcing out AIG CEO Hank Greenberg. Criminal charges could soon be filed in state court.
STEPHEN RYAN, MANATT, PHELPS & PHILLIPS, LLP: These people have hit the legal Trifecta. It`s the negative Trifecta. They have three different agencies looking at the same conduct and so it will be very difficult for them to extricate themselves. They also will then have the wave of civil suits that will follow. So it will be a very messy time for these companies.
GERSH: These new indictments bring the investigation one step higher up the corporate ladder nearer to former AIG CEO Hank Greenberg. But analysts say it`s unclear whether the Justice Department has the evidence to go any higher. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.
