Former AIG executive gets 4 years in prison for $500M fraud

Discussion in 'Wall St. News' started by crgarcia, Jan 27, 2009.

  1. AIG executive sentenced to 4 years in prison

    Former AIG executive gets 4 years in prison for $500M fraud

    HARTFORD, Conn. (AP) -- A former executive of insurance heavyweight American International Group Inc. was sentenced to four years in prison Tuesday in a fraud case that authorities say cost shareholders more than $500 million.

    Christian Milton of Wynnewood, Pa., declined to comment during a hearing in U.S. District Court in Hartford. He was ordered to report to the federal Bureau of Prisons on March 25, and his lawyers said they were preparing an appeal.

    Judge Christopher Droney also fined Milton $200,000.

    Milton, 61, AIG's vice president of reinsurance from 1982 to 2005, was convicted last year of conspiracy, securities fraud, mail fraud and making false statements to the Securities and Exchange Commission.

    The investigation also led to the convictions of four General Re Corp. executives last year for their roles in manipulating AIG's financial statements.

    Prosecutors said New York-based AIG paid Gen Re in a secret side agreement to take out reinsurance policies with AIG in 2000 and 2001, propping up AIG's stock price and inflating reserves by $500 million.

    Reinsurance policies are backups purchased by insurance companies to completely or partly insure the risk they have assumed for their customers.

    Milton's lawyer, Frederick Hafetz, told the judge before the sentence was announced that Milton is a good person who was known for helping AIG employees with their problems, including two workers who died from AIDS in the 1980s.

    Hafetz also said Milton didn't benefit personally from the fraud, which he called an aberration in Milton's life.

    "He has lived a life that our society would prize in its most pious ways," Hafetz said.

    Assistant U.S. Attorney Ray Patricco countered that Milton has shown no remorse for his actions and hasn't taken responsibility. He also claimed Milton has done little charitable work.

    "He knew exactly what was at stake in this endeavor," Patricco said.

    The judge agreed with the prosecutor.

    "He surely knew this was a scam from the very start," Droney said. "This was no momentary lapse in judgment."

    Milton's wife, her elderly parents and her adult children were among those in the courtroom on Tuesday.

    Authorities expect Milton to be deported to his native England after he serves his sentence.

    Milton's lawyer asked that his client serve his time at Allenwood Federal Correctional Institute in central Pennsylvania. Prison officials have not decided yet where Milton will be imprisoned.

    Ronald Ferguson, the former chief executive of General Re, was sentenced in December to two years in prison and fined $200,000 for his role in the fraud.

    Three other former Gen Re officials await sentencing. They are former senior vice president Christopher P. Garand, former chief financial officer Elizabeth Monrad and former senior vice president Robert Graham.

    General Re is part of Berkshire Hathaway Inc., which is led by billionaire investor Warren Buffett of Omaha, Neb.
  2. a classic case of RICO......sure to be followed by many more cases very soon. hopefully former CEO's of financial companies share same fate as Milton.
  3. Mvic


    This is what we need to see more of, some accountability.

    As bitter as it must have been for Greenburg at the time to get ousted from AIG, in retrospect he is likely giving thanks for Spitzer :)
  4. MachM1


    50% of all the managers in Giant banks & Giant companies are frauds. These managers acquire business contracts through bribes, contacts and illegal activities.

    Now many more frauds will be discovered in Giant companies & Banks.
  5. steal $100 get life in prison, steal $500 million get 4 years :D