The US Department of Justice has filed criminal and civil charges against five former senior executives of General Re Corporation and American International Group for playing a part in misleading investors through the use of fraudulent reinsurance transactions.

The complaint alleges that the defendants helped AIG structure two sham reinsurance transactions that falsely increased AIG’s loss reserves in the fourth quarter of 2000 and first quarter of 2001 by a total of $500 million. The transactions were initiated by AIG to quell criticism by analysts concerning a reduction in the company’s loss reserves in the third quarter of 2000.

Four of the former executives, Ronald Ferguson, Elizabeth Monrad, Robert Graham and Christopher Garand, were with Gen Re, while the fifth, Christian Milton, was with AIG.