Former Gen Re CFO Elizabeth Monrad to Be Sentenced Feb. 10

Copyright 2008 A.M. Best Company, Inc.All Rights Reserved BestWire

December 18, 2008 Thursday 01:42 PM EST

398 words

Former Gen Re CFO Elizabeth Monrad to Be Sentenced Feb. 10

Chad Hemenway

HARTFORD, Conn.

With the sentencing of the most high-profile defendant in the finite reinsurance cases over, court records show that Elizabeth Monrad is scheduled to be sentenced Feb. 10.

Ronald Ferguson, former chief executive at General Reinsurance Corp., was sentenced to two years in prison plus two years supervised release and a $200,000 fine on Dec. 16.

Ferguson and Monrad, formerly chief financial officer of Gen Re, were convicted in February along with Christopher Garand, Robert Graham and Christian Milton on charges of conspiracy, securities fraud, making false statements to the U.S. Securities and Exchange Commission and mail fraud in connection with a fraudulent finite reinsurance transaction between AIG and Gen Re. The sham finite reinsurance transaction was created, prosecutors said, for the sole purpose of helping AIG boost its reserves by $500 million.

Federal Judge Christopher Droney, who presided over the trial, had assigned each defendant a minimum offense level of 36, which, under United States Sentencing Guidelines, instructed him to sentence each person to approximately 15 to 20 years in prison (BestWire, Nov. 3, 2008).

Mark H. Allenbaugh, former staff attorney of the United States Sentencing Guidelines Commission, said the co-defendants had to be relieved at the news Droney deviated from the sentencing guidelines to give Ferguson two years in prison. The judge, Allenbaugh said, will probably take into account what is called "inter-defendant disparity." Because Ferguson, the most high-profile of defendants, received two years, it is highly unlikely that any of the remaining defendants will receive much more than that, if not less, Allenbaugh said.

"It certainly sets the bar for huge grounds for appeal if one of these other people are sentenced to more time," he said.

Monrad's attorneys have argued leniency for their client "because she was convicted of aiding a different company, that had its own finance professionals and auditors." Monrad did not "conceive, originate, or direct" the loss portfolio transfer, which was "conceived at the highest levels of AIG and Gen Re, and its terms were priced, negotiated, approved, and settled by others" (BestWire, Nov. 25, 2008).

Christian Milton is scheduled to be sentenced Jan. 27. No sentencing dates for Garand and Graham have been set.

(By Chad Hemenway, associate editor, BestWeek: [email protected])

December 19, 2008