Jury Can Hear 7 Tapes of Ex-General Re Executives

posted on:
November 5, 2007



Jurors at the fraud trial of four former General Reinsurance Corp. executives can hear a taped conversation in which a witness said American International Group Inc. will "find ways to cook the books," a U.S. judge ruled. 

Prosecutors may play tapes at the criminal trial of former General Re Chief Executive Officer Ronald Ferguson, three of his former colleagues, and Christian Milton, the former head of reinsurance at AIG, the judge ruled Oct. 30. The five are accused of using a sham reinsurance contract to inflate AIG's reported reserves for claims by $500 million.

One tape involves a conversation on Nov. 14, 2000, between one defendant, former General Re Chief Financial Officer Elizabeth Monrad, and John Houldsworth, a company executive who pleaded guilty and agreed to be a prosecution witness. U.S. District Judge Christopher Droney denied a bid by defendants to bar portions of that tape. General Re is a unit of Warren Buffett's Berkshire Hathaway Inc.

Houldsworth tells Monrad "if there's enough pressure on" at AIG, the world's largest insurer, "they'll find ways to cook the books, won't they," according to the Oct. 30 opinion by Droney in Hartford. Houldsworth also said "we won't help them do that too much" and "we'll do nothing illegal," to which Monrad replies "right," the judge wrote.

Droney's opinion allows prosecutors to use seven taped conversations, denied use of an eighth, and deferred a decision on a ninth. The defendants opposed all of them, arguing they were irrelevant, prejudicial, or inadmissible hearsay.

Jury selection is scheduled for Dec. 3 and opening arguments are set for Jan. 7 in the trial of Ferguson, Monrad and Milton. The other defendants are Christopher Garand, a former senior vice president in charge of finite reinsurance, and Robert Graham, former assistant general counsel.

AIG was run by former CEO Maurice "Hank" Greenberg, who resigned amid accounting probes.

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