Ex-Gen Re executive gets 1 year in prison

Discussion in 'Wall St. News' started by crgarcia, Mar 4, 2009.

  1. Ex-Gen Re executive gets 1 year in prison

    Former Gen Re executive sentenced to 1 year in prison, fined $150K for accounting scandal

    HARTFORD, Conn. (AP) -- A former senior vice president at General Re Corp. was sentenced Wednesday to a year and a day in federal prison for an accounting fraud scandal that artificially propped up the stock price of insurer American International Group Inc.

    Christopher Garand was also fined $150,000 for his role in the case which authorities say cost AIG shareholders more than $500 million.

    Garand is one of five former executives convicted in the case.

    Federal prosecutors say New York-based AIG paid Stamford-based Gen Re in a secret deal to take out reinsurance policies with AIG in 2000 and 2001. They say the scheme propped up AIG's stock prices and inflated reserves by $500 million.

    U.S. District Judge Christopher Droney noted at Wednesday's hearing that Garand didn't try to benefit personally from the stock manipulation.

    But the judge said Garand knew that the scheme was illegal. "Mr. Garand fell far short of discharging his responsibility to investors," he said.

    Garand had faced up to 160 years in prison and a fine of up to $29.5 million.

    Defendants in the case have said in court papers that there was no link between the eight-year-old deal and AIG's recent financial troubles that sparked a federal financial-rescue package.

    Garand, of Upper Saddle River, N.J., begged Droney for mercy before the sentence was pronounced, saying he didn't know how he and his family would cope with a prison sentence.

    "I'm profoundly sorry, your honor," Garand said. "I ask for your wisdom, compassion and mercy."

    His wife, Barbara, a school board official in their New Jersey community, also pleaded with Droney. "Our lives are in your hands."

    Neither Garand nor his wife would comment after the hearing. He was ordered to report to prison on April 22, but defense attorneys have asked that he remain free on bond pending an appeal.

    Prosecutors also declined to comment after the hearing.

    Garand was the third executive to be sentenced. A former General Re chief executive, Ronald Ferguson, was sentenced in December to two years in prison and fined $200,000, while former AIG vice president Christian Milton was sentenced to four years in prison and fined $200,000.

    Still to be sentenced are Elizabeth Monrad, former General Re chief financial officer, and Robert Graham, a former General Re senior vice president.