Prosecutors say execs knew statements were being manipulated
"The defendants knew the true deal and they documented a false one," prosecutor Eric Glover said in his closing argument.
But an attorney for one of the defendants repeatedly invoked the name of widely admired billionaire investor Warren Buffett in arguing there was no wrongdoing and only a routine deal between Berkshire Hathaway's General Re Corp. and American International Group Inc. Buffett heads Berkshire Hathaway.
"You don't encourage your boss to talk to Warren Buffett about a deal if you're a criminal," said Reid Weingarten, attorney for Elizabeth Monrad, one of the defendants.
Prosecutors had said they might seek testimony from Buffett, but did not. Some of the defendants said they believed he was involved in the deal that lead to the charges, but prosecutors and Buffett say that wasn't the case. Buffett has not been charged with any wrongdoing.
Jury deliberations were expected to begin Wednesday once closing arguments were completed.
The arguments in Hartford capped a monthlong trial for four former executives of General Re and a former AIG executive. The defendants are accused of inflating AIG's reserves through reinsurance deals by $500 million in 2000 and 2001 to artificially boost its stock price.
Reinsurance policies are backups purchased by insurance companies to completely or partly insure the risk they have assumed for their customers.
Authorities say the premiums supposedly due AIG were an illusion. In a roundtrip of cash, AIG gave Gen Re the $10 million to pay the premiums as part of a secret side agreement, prosecutors said.
Glover said that arrangement was like asking an insurer to pay a driver to insure their car.
"Remember, no one pays you to reinsure your car," Glover said.
Glover confirmed during his closing statements that former AIG CEO Maurice "Hank" Greenberg was an unindicted coconspirator in the case. Greenberg has not been charged and has denied any wrongdoing, but allegations of accounting irregularities, including the General Re transactions, led to his resignation in 2005.
Glover said Greenberg trumpeted the increased loss reserves.
"Another quote by Mr. Greenberg, another lie to analysts and shareholders," he said.
Prosecutors also played tapes of phone calls and cited e-mails to bolster their case.
Glover played one tape in which Monrad, Gen Re's chief financial officer from June 2000 through July 2003, asked if the deal would show up in any public documents.
Weingarten, who started off closing arguments for the defendants, said prosecutors played snippets of calls out of context. Monrad was concerned that attention over the deal might make it look like her company was too close to AIG or couldn't handle its own liabilities, Weingarten said.
He said his client wanted more accountants and attorneys involved and was not responsible for how AIG booked the deals.
Weingarten attacked two government witnesses, saying one was like a virus and that the other was desperate to stay out of jail.
Weingarten said it did not make sense that Greenberg, at the end of his career, would be willing to commit a felony because reserves dropped by a fraction of a percent.
In addition to Monrad, the defendants are former General Re CEO Ronald Ferguson; former General Re Senior Vice President Christopher P. Garand; and Robert Graham, a General Re senior vice president and assistant general counsel from about 1986 through October 2005.
Also charged is Christian Milton, AIG's vice president of reinsurance from about April 1982 until March 2005.
If convicted of all the charges, Ferguson, Monrad, Milton and Graham each face up to 230 years in prison and a fine of up to $46 million. Garand faces up to 160 years in prison and a fine of up to $29.5 million.
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