ALEXANDRIA, Virginia (AP) ? Four former top executives of insurance giants General Re and American International Group pleaded not guilty to federal fraud and conspiracy charges yesterday and pledged $1 million in bond each as their trial was set for May.

The Justice Department has accused the four of orchestrating an audacious fraud, putting together a sham reinsurance transaction that allowed AIG to falsely report some $500 million in reserves against losses and thereby mislead shareholders, Wall Street and regulators. The charges against the executives come as the government?s investigation of the insurance industry widens.

The alleged conspiracy, using phoney contracts and a secret side deal, was designed to make it appear that AIG?s loss reserves were growing so as to inflate the company?s stock price in 2000 and 2001, prosecutors say.

Appearing in federal court in Alexandria were: Ronald Ferguson, who was chief executive of Berkshire Hathaway Inc.?s General Re; Elizabeth Monrad, its former chief financial officer; Robert Graham, the company?s former assistant general counsel; and Christian Milton, who ran the reinsurance division of AIG.

By turns, they stood before US District Judge Gerald Bruce Lee and replied ?Not guilty? when asked how they were responding to the charges. They also said they wanted a jury trial rather than a hearing with only a judge.

Each pledged a $1 million bond and surrendered his or her passport. Lee set a trial date of May 22, saying it likely would last about 16 days.

Each defendant, if convicted on all 13 criminal counts of conspiracy, fraud and making false statements to the Securities and Exchange Commission, could face a maximum 95 years in prison and $7.75 million in fines.

New York-based AIG, one of the world?s largest insurance companies, last week agreed to pay a record $1.64 billion in a settlement with federal and New York state authorities. It also apologised for having deceived investors and regulators with misleading accounting practices.

AIG was alleged to have taken part in bid-rigging schemes, paid secret commissions to insurance brokers to steer business to it, used phoney insurance deals to burnish its earnings and misstated the amounts of workers? compensation premiums it had collected.

The company?s ousted chief executive, Maurice (Hank) Greenberg, remains under investigation by the Justice Department and the SEC, and has been named in a civil lawsuit by New York Attorney General Eliot Spitzer.

Greenberg, though not named, is referred to as ?AIG unindicted co-conspirator 1? and portrayed as playing a role in the sham transaction in the indictment handed up this month by a federal grand jury in Norfolk, Virginia.

Greenberg has denied any wrongdoing. He has said that transactions made during his 38 years at the helm of AIG were proper and correctly accounted for.

Ferguson, Monrad, Graham and Milton also are named in a related civil lawsuit by the SEC alleging that they aided AIG?s alleged securities fraud.

The indictment stemmed from the Justice and SEC investigations of a five-year-old deal between AIG and General Re, both major players in the reinsurance industry, which sells insurance to primary insurers to help spread risk.