HARTFORD, Conn.--All five defendants in the General Re Corp. finite trial have been found guilty on all counts they faced in a case over their roles in allegedly bogus loss portfolio reinsurance transaction from 2000 designed to help American International Group Inc. inflate its loss reserves.

The five defendants--Gen Re Chief Executive Officer Ronald E. Ferguson; Christopher P. Garand, former senior vp in charge of U.S. finite underwriting for Gen Re; Robert Graham, former senior vp and legal counsel for the reinsurer; Elizabeth Monrad, Gen Re's former chief financial officer; and Christian M. Milton, AIG's former vp for reinsurance--were found guilty by a jury on various counts of conspiracy to commit securities and mail fraud and making false statements to the U.S. Securities and Exchange Commission.

U.S. District Judge Christopher F. Droney set a sentencing date of May 15 for the five defendants, who remain free on bond pending sentencing.

Each of the defendants faces a possible multiyear prison term, though the range of possible sentences will be determined under federal sentencing guidelines, based in part on Judge Droney's findings on the extent of the financial damage caused by the scheme.

Prosecutors alleged that the defendants engineered a sham loss portfolio reinsurance transaction that helped AIG inflate its loss reserves by $500 million in 2000 and 2001. The deal, aimed at countering stock analyst concerns about AIG's reserve levels, transferred no risk of loss to AIG and featured an unwritten side agreement that AIG would refund Gen Re's $10 million premium and pay it a $5 million fee, the government charged.

Defense lawyers argued that no such side agreement existed, that the defendants believed the transaction to be a legitimate finite deal and that they should not be held responsible for AIG's accounting decisions.

Gen Re accounted for the loss portfolio deal as a deposit, while AIG accounted for it as a risk transaction, allowing it to book the loss reserves. In a 2005 restatement of several years of its results, AIG acknowledged that it had accounted for the deal improperly.

One of Mr. Ferguson's lawyers, Clifford Schoenberg, issued a statement expressing outrage at the verdict and at the prosecution itself, calling the government's decision to pursue the case a "terrible travesty."

"The fact that the prosecutors somehow pulled the wool over the eyes of a jury who had no conversancy with the arcane vocabulary and customs and practices of the reinsurance industry is deeply disturbing," Mr. Schoenberg, who is with Cadwalader, Wickersham & Taft L.L.P., said in the statement.

"We can only hope that Judge Droney or the court of appeals will reverse this grave miscarriage of justice," Mr. Schoenberg said.

"There will definitely be an appeal," said Mr. Milton's lawyer, Frederick Hafetz of Hafetz & Necheles. "We believe there are substantial issues dealing with fairness of a trial in multiple-defendant cases."

Federal prosecutors praised the jury and said the verdict sends a message that the government will act to protect investors and will go after defendants who aid fraudulent schemes that benefit others.

"You not only can't cook your own books, you can't get in someone else's kitchen, give them the ingredients and help them cook their books," said Assistant U.S. Attorney Raymond Patricco.

"These types of aiding-and-abetting crimes typically don't get prosecuted," added Paul Pelletier, principal deputy chief for litigation with the U.S. Justice Department's fraud section. But the verdict shows that executives involved in financial fraud "can't hide behind the idea that these offenses are 'speeding tickets' that need to be paid."

Asked if there may be more prosecutions related to the Gen Re loss portfolio deal in the future, Mr. Pelletier said the government's investigation is continuing but declined to comment further.

All of the defendants but Mr. Garand were originally indicted in Norfolk, Va., in February 2006. The case was later transferred to Connecticut, and Mr. Garand was added as a defendant in a superseding indictment in September 2006.

The securities fraud and false statement charges relate to individual AIG financial reports between 2000 and 2003 that were allegedly falsified by the impact of the loss portfolio deal. The mail fraud counts relate to AIG's mailing of allegedly falsified annual reports to shareholders from 2001 to 2003.