Defendant in reinsurance fraud sentenced
HARTFORD, Conn. — A former executive of Connecticut-based General Re Corp. was sentenced Thursday to a year and a day in prison for his role in an accounting scandal that authorities say cost shareholders of American International Group Inc. more than $500 million.
Robert Graham, 61, of Westport, will also have to serve two years supervised release after the prison time and pay a $100,000 fine. He had faced up to life in prison and a fine of up to $46 million.
Graham, who was senior vice president and assistant general counsel at Stamford-based General Re from 1986 to 2005, will remain free on bond pending his appeal of his convictions. His lawyer, Alan Vinegrad, had sought a period of home confinement and community service.
“I realize there are no do-overs in life,” Graham told U.S. District Judge Christopher Droney in Hartford. “Nothing I can say or do now can change what has happened or its impact on the lives of others or on me. Your honor, I regret that more than words can adequately express.”
Graham, one of several former executives charged in the case, said he was very proud of having developed a reputation for honesty and integrity during his three decades as an attorney.
“That’s all gone now,” he said. “Instead of my career and reputation as a lawyer serving as a good example to others, as a disgraced and disbarred lawyer they will now serve only as a cautionary tale.”
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 with the goal of quelling criticism by analysts and easing concerns by investors.
Reinsurance policies are purchased by insurance companies to completely or partly insure the risk they have assumed for their customers.
Droney said Graham played an important role in the fraud, because he drafted bogus legal documents designed to hide the wrongdoing from investors and regulators. He said a factor in the sentence was deterring others from committing corporate fraud.
“He didn’t want others to connect the dots,” the judge said. “This is hardly the kind of ethics or conduct lawyers should follow.”
Droney also took issue with Graham’s claim that he only spent a few hours working on the deal. He said Graham’s involvement spanned several months.
Graham’s wife, Evelyn, and three friends also testified Thursday, saying his convictions were the only departure from a life of honorable work, community service and helping those in need. Dozens of other supporters wrote letters to the judge. About 30 people attended the sentencing hearing.
Droney noted there was no link between the eight-year-old deal and AIG’s recent financial troubles that sparked a federal financial-rescue package.
Graham was the last of five defendants to be sentenced after being convicted last year of conspiracy, securities fraud, making false statements to the Securities and Exchange Commission and mail fraud following a five-week trial.
Former Gen Re Chief Executive Ronald Ferguson was sentenced in December to two years in prison and fined $200,000; former Gen Re Chief Financial Officer Elizabeth Monrad was sentenced to 18 months in prison and fined $250,000; former Gen Re senior vice president Christopher Garand was sentenced to a year and a day in prison and fined $150,000; and former AIG vice president Christian Milton was sentenced to four years in prison and fined $200,000.
General Re is part of Berkshire Hathaway Inc., which is led by billionaire investor Warren Buffett of Omaha, Neb.
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