More Sham Reinsurance Deals and 50 Lashes with a Wet Noodle for the Perp

If you steal $5,000 from a bank using a weapon the penalty is sure, swift and severe. Steal millions from everyday American citizens and one of Chris Dodd’s Hartford based federal judge friends will slap you with a minimal prison sentence. Pull out a chair and find out about justice for the super wealthy and politically connected – Hartford style.

Let’s start at the National Underwriter and yesterday’s sentencing of General Re’s former CEO Ronald E. Ferguson:

Ignoring a government request that he serve significant time, a federal judge today sentenced former General Re. Corp. chief executive officer Ronald E. Ferguson to two years in prison for securities fraud involving a sham reinsurance transaction.

U.S. District Court Judge Christopher F. Droney in Hartford, Conn., also imposed a $200,000 fine and two years of supervised release on the 66-year-old executive.

Mr. Ferguson was ordered to report to a Bureau of Prisons facility on Feb. 18, 2009, if he is unsuccessful in arguments at a prior court hearing that he should remain free on bond pending his appeal of conviction to the 2nd Circuit U.S. Court of Appeals.

He was convicted in February with four other executives of a complicated reinsurance deal with a hidden side agreement that permitted American International Group to inflate its financial picture.

The other defendants convicted with Mr. Ferguson–who remain to be sentenced–are Christopher Garand (a former Gen Re senior vice president), Robert Graham, (Gen Re’s former senior vice president and counsel), Elizabeth Monrad (Gen Re’s former chief financial officer) and Christian Milton (former AIG vice president for reinsurance).

Last month, Judge Droney found that the scheme cost shareholders more than $500 million. The government said the amount was up to $1.4 billion.

The judge ruled that the defendants did not have to pay restitution, because attempting to locate the thousands of investors would delay the sentencing process.

I find it curious that Droney did not make Ferguson pay restitution Continue reading “More Sham Reinsurance Deals and 50 Lashes with a Wet Noodle for the Perp”