NEW HAVEN, Conn. (AP) -- Federal prosecutors in Connecticut say a scheme to manipulate the financial statements of the world's largest insurance company, American International Group Inc., resulted in a loss of more than $1 billion to investors.
Four former executives of General Re Corp. and a former executive of American International Group were convicted in February of conspiracy, securities fraud, mail fraud and making false statements to the Securities and Exchange Commission. They await sentencing.
One of the defendants, Christopher Garand, said in court papers filed Sept. 2 that the government contends the loss from the scheme exceeded $1 billion.
A spokesman for the U.S. attorney's office in Connecticut declined Friday to comment, saying prosecutors will respond in court.
The defendants are expected to challenge the estimate, which could affect the length of their sentences. The other defendants, all of whom await sentencing, are Ronald Ferguson, Elizabeth Monrad, Robert Graham, and Christian Milton.
In a separate set of court papers filed Friday, Garand argued that prosecutors failed to show there was any loss caused by the deal that led to the charges.
Milton also filed court papers Friday, saying he was not personally enriched by the scheme as defendants were in other recent corporate scandals.
"This case stands in contrast to recent high-profile cases (such) as Enron, WorldCom, Adelphia and Cendant, in which defendants received severe and lengthy sentences," Milton's attorneys wrote.
"Those cases involved massive frauds which personally enriched the defendants by conduct that destroyed public companies and the lifetime investment of shareholders," they wrote.
Prosecutors said the defendants participated in a scheme in which AIG paid Gen Re as part of a secret side agreement to take out reinsurance policies with AIG in 2000 and 2001, propping up its stock price and inflating reserves by $500 million.
Reinsurance policies are backups purchased by insurance companies to completely or partly insure the risk they have assumed for their customers.