A Connecticut jury has found five former insurance company executives guilty of a scheme to manipulate the financial statements of the world's largest insurance company.
Monday's verdict came following a month long trial in federal court in Hartford. The guilty are four former executives of Stamford based General Re Corporation and a former executive of American International Group.Â They were accused of attempting to boost AIGâ€™s stock price with a sham reinsurance deal that made it look as if the companyâ€™s loss reserves had been increased by 500 million dollars.Â In fact, the prosecution alleged, the deal transferred very little risk to Gen Re.Â Doug McLeod of Business Insurance Magazine says the verdict will be a shock to the industry.
"I think it may be a surprise that all of the defendants were convicted on all of the counts, it was a real sweep for the government.Â These were fairly well known people in the insurance industry â€“ a lot of people had done business with them over the years, and I think it may be jolt to some people."
The five executives found guilty may not have household names but evidence in the case did mention some giants of the business world â€“ the prosecution said that Hank Greenberg, the former CEO of AIG was a co-conspirator in the case, although he was never indicted.Â Also frequently mentioned was legendary investment guru Warren Buffett, whose Berkshire Hathaway owns Gen Re.Â The defense alleged he knew of the deal and approved it, although Mr Buffett has said he wasnâ€™t acquainted with the details.Â Sentencing has been set for May â€“ but the case seems certain to go to appeal.