American International Group five former insurance executives

Prosecutors in the trial of five former insurance executives insisted Monday in closing arguments that the defendants had deliberately mounted a fraud to allow the American International Group to manipulate its financial statements.
But prosecutors avoided mention of Warren E. Buffett, the investor whose company Berkshire Hathaway owns the General Re Corporation, which helped A.I.G. on the questionable deal.Instead Eric Glover, a federal prosecutor, told jurors and a packed courtroom that four defendants from General Re knowingly worked with a fifth defendant, from A.I.G., to create a sham transaction that allowed A.I.G. to inflate its loss reserves improperly by $500 million in 2000 and 2001. Mr. Buffett was not accused of wrongdoing.The transaction, whose accounting A.I.G. has acknowledged was improper, helped A.I.G. to assuage analysts that its loss reserves — a crucial indicator — were not too low, which in turn bolstered its flagging share price.A.I.G., the insurance company, paid Gen Re $5 million fee for the deal — an unusual arrangement. In their closing statements, defense lawyers questioned the reliability of two important government witnesses and criticized prosecutors for citing snippets of telephone conversations.The summations, which are expected to continue Tuesday, come after a five-week trial in Federal District Court here. Jurors could begin deliberations as early as Wednesday.The two most prominent defendants are Ronald E. Ferguson, the former chief executive of General Re, and Elizabeth A. Monrad, Gen Re’s former chief financial officer.In the indictment last year, A.I.G.’s former chief executive, Maurice R. Greenberg, was identified as an unindicted co-conspirator who was aware of the details of the deal. Mr. Greenberg has denied any wrongdoing.Prosecutors have treaded lightly with Mr. Buffett, whom they had put on a witness list but did not call to testify. Mr. Buffett has cooperated with investigators.By contrast, defense lawyers highlighted what they contended was Mr. Buffett’s knowledge of the deal.A e-mail message in January 2001 from Mr. Ferguson to Mr. Buffett, released in court papers, says: “Warren, just a quick note to let you know why I hesitated a moment when you mentioned the $5,000,000 fee on the reserve transaction. We are indeed charging a 1% fee but for some reason A.I.G. decided to split the deal in to two $250,000,000 tranches one to be registered in 2000 and one in 2001.”In his closing statement — the first by the defense — Reid Weingarten, who represents Ms. Monrad, put the blame on a low-level, unindicted A.I.G. accountant, whom he said had made an honest mistake that “traveled up the food chain.”Mr. Weingarten derided the prosecution’s description of the questionable transaction. “You think that’s the first time it’s happened in the economic world of America?” he asked the jurors. “There’s a whole industry that does it.”For more than two hours, Mr. Glover, the prosecutor, focused on what he called the secret side agreements and fake documentation intended to hide the lack of real risk transfer between A.I.G. and Gen Re — something needed for the deal to be legitimate.“The defendants knew the true deal and documented the false one,” Mr. Glover said. Avoiding complex arcana, he told the jurors to “follow the money” and to compare the workings of the deal to buying ordinary car insurance. “Remember that no one pays you to insure your car,” he said of the $5 million fee.Mr. Glover played telephone recordings that he said showed that the defendants, in particular Ms. Monrad, knew the deal was improper. In several of them, Ms. Monrad can be heard laughing, saying that with regard to the fee arrangement, “if we ever talked about it, our name would be mud.”Mr. Weingarten, Ms. Monrad’s lawyer, slammed Mr. Glover for what he said was taking calls out of context.Intoning before the jury, Mr. Weingarten repeatedly pointed his finger and swept his arms. He repeatedly said, “Oh, my God!” in mock tones, apparently to illustrate his contention that nothing deliberately fraudulent had occurred. And he suggested that the unusual fee arrangement was in part motivated by Ms. Monrad’s effort to “make up to” A.I.G. for a failed film-financing deal with Gen Re.Mr. Weingarten also questioned the memory and credibility of the two prosecution witnesses — John Houldsworth and Richard Napier, both former senior Gen Re executives, who have pleaded guilty to fraud.Ms. Monrad, who worked briefly as the chief financial officer of TIAA-CREF, a large investment manager, after leaving A.I.G., stood out in a sea of gray suits in a light pink sweater.

The defendants are variously charged with 16 counts of conspiracy, including securities fraud, mail fraud and submitting false statements to the Securities and Exchange Commission, over 2000 to 2003.The other defendants are Christian Milton, A.I.G.’s former head of reinsurance; Robert Graham, Gen Re’s former senior vice president and assistant general counsel; and Christopher P. Garand, a former Gen Re senior vice president.