January 27, 2009
Another former AIG executive gets serious prison time, but also a serious variance
This Rueters piece provides the basics on a notable white-collar sentence handed down today:
A former executive at American International Group Inc was sentenced to four years in prison on Tuesday for his role in a reinsurance deal that prosecutors said misled AIG investors. Christian Milton, a former AIG vice president of reinsurance, and four former executives at Berkshire Hathaway Inc's General Re Corp business were found guilty last February of conspiracy and fraud....
According to sentencing guidelines, Judge Christopher Droney of U.S. District Court in Hartford, Connecticut, could have sentenced Milton, of Wynnewood, Pennsylvania, to as much as 210 years in prison.
Ronald Ferguson, General Re's former chief executive, was sentenced to two years in prison last month in the same case.
Additional details about the case and the sentencing can be found from the AP and Bloomberg. None of the media accounts effectively detail exactly how the guidelines and the 3553(a) factors were utilized, but I think I am on solid ground when I conclude that the defendant here got the benefit of a big-time variance.
January 27, 2009 at 05:05 PM | Permalink
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Should the defendant have been convicted at all? As a writer on the insurance industry, I have communicated with several sources who see Milton as a scapegoat of politically motivated prosecution. An expert on finite reinsurance informs me that these transactions are normal and common and will continue to be so, though they'll be called "structured reinsurance" in the future because of the taint of this case.
One can believe in robust sentences for genuine theives without rejoicing in the imprisonment of people on the basis of class resentment, political villain-mongering and crisis scapegoating.
Some links that shed light on the barbarism of such scapegoating:
Posted by: Idler | Jan 30, 2009 11:53:14 AM
Not very surprising. I have been in business (I am life insurance broker) for 16 years and it's really unbelievable what was happening last year. AIG was one of the biggest and most respectable players and within few months it almost vapoured (lost maybe 95% of share value??). Our subsidiary AIG Life of Canada wasn't bounded with its mother, but still, the loss of clients' confidence was significant. Now, AIG LoC was sold to Bank of Montreal. Old AIG is finished chapter here. Who dared to guess so one-two years ago?? Now we can see there have been laid many "landmines" in recent 6-7 years. It seems management-owners connection is pretty biased, not only in AIG...
Posted by: life insurance Canada | Feb 5, 2009 5:54:49 PM