Judge Christopher Droney of the US District Court for the District of Connecticut ruled Friday that the loss by shareholders of AIG as a result of a scheme to manipulate the company’s financial statements was more than $500 million, the AP reports. The ruling means that five former insurance executives already convicted of the scheme could face up to life in prison under sentencing guidelines tied to the amount of the loss. The executives are four former executives of General Re Corp. and a former executive of AIG, who were convicted in February of conspiracy, securities fraud, mail fraud and making false statements to the Securities and Exchange Commission, according to the AP.
Prosecutors argued that according to a study by their expert, the fraud-related losses to AIG shareholders totaled $1.2 billion to $1.4 billion, and could have been as low as $544-$597 million under a different methodology. The defendants challenged either estimate, saying there was no loss to investors, but the court reportedly found the lower range offered by prosecutors reasonable.
Prosecutors have only recommended that the defendants should receive a “substantial” prison sentence, according to the article, while the probation department has recommended sentences of 14 years to more than 17 years for each defendant.