I got this error while updating an splistitem. It was coming while trying to update “Person or Group” type column.
This is the correct way to update the column of type “Person or Group”.
itemApprovalAssignment["Title"] = txtTitle.Text.Trim();
itemApprovalAssignment["Assign_x0020_To"] = oweb.EnsureUser(peAssignTo.CommaSeparatedAccounts);
i.e. to use EnsureUser method.