executive pleaded guilty in connection with a federal investigation into accounting irregularities at
American International Group
Richard Napier, a former Gen Re senior vice president, pleaded guilty Friday to a charge of conspiracy to falsify
Securities and Exchange Commission
filing, as part of a scheme to enable AIG to artificially boost its insurance reserves.
Napier's plea in federal court in Virginia comes a day after John Houldsworth, a former top Gen Re executive in Ireland, pleaded guilty to a similar charge.
The investigation by federal prosecutors in Virginia centers around an alleged a scheme to prop up AIG's stock price by masking declines in its claims reserves and massaging quarterly earnings. Authorities contend the primary purpose of the transaction was to add $500 million in "phony loss reserves" to AIG's balance sheet to quiet Wall Street criticism.
AIG, in an undisclosed side agreement, paid Gen Re a $5.2 million fee for putting the deal together.
Authorities contend the Gen Re transaction began with a phone call from former AIG Chairman and CEO Maurice Greenberg to Ronald Ferguson, who was then Gen Re's president. The SEC complaint contends it was understood by Ferguson that AIG wouldn't assume any actual risk in the deal.
General Re is a unit of
, the publicly traded investment vehicle of Warren Buffett, who hasn't been charged with any wrongdoing in the probe.
The Gen Re transaction is one of several irregular transactions that led AIG to restate its financial results for the four years going back to 2001.