White-Collar Crime
Five Convicted in AIG Reinsurance Scheme
Posted Feb 26, 2008, 07:08 am CST
By Debra Cassens Weiss
A federal jury in Connecticut has found five former insurance executives guilty of securities fraud in a reinsurance scheme that boosted the stock price of American International Group Inc.
Prosecutors said the investigation is continuing, report the Wall Street Journal (sub. req.) and New York Times. "We've got a lot of work to do to work up the ladder," said assistant U.S. attorney Paul Pelletier.
The statement fuels speculation over whether the investigation will reach Maurice Greenberg, the former CEO of AIG identified at the trial as an unindicted co-conspirator. He has denied any wrongdoing and he has not been charged.
One of the convicted executives had worked at AIG and the other four worked for the General Re reinsurance company. The Wall Street Journal story says the trial involved “arcane accounting rules and tens of thousands of pages of documents.”
Jerry Bernstein, a white-collar criminal-defense lawyer at Blank Rome, told the Wall Street Journal the victory shows jurors are capable of handling such cases. “Manipulation of financial reserves and reinsurance are not concepts that typical jurors know about, so these convictions can only further embolden the Justice Department to bring to trial cases dealing with complex financial transactions," he said.