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American International Group (AIG) (Major Players (Former Chief Executive:…
American International Group (AIG)
Consequences
Department of Justice, the Securities and Exchange Commission and the New York Attorney General’s office each sued AIG
AIG settled in 2006 for $1.6 billion
AIG nearly collapsed. Needed $185 billion federal rescue
Greenberg and Smith denied being involved
Year later, Greenberg and Smith settlement included giving up more than $9.9 million
Milton was "convicted of conspiracy, securities fraud, mail fraud, and making false statements to the SEC in the case, which cost shareholders nearly $600 million"
Major Players
Former Chief Executive: Maurice R. Greenberg
Accused of overseeing sham deals with General Re. and Capco
Former CFO: Howard Smith
New York Attorney General Eliot Spitzer
Brought in civil accounting charges back in 2005 against AIG
Senior Executive: Christain Milton
1982 - 2005: Vice President of Reinsurance
Previous allegations of fraud with another company
Financial Products Group: Joesph Cassano
Head of AIGs Financial Product Group and accused of leading credit default swaps.
Background
Founded in 1919 by Cornelius Vander Starr
Insurance company for Chinese
Links
https://www.sec.gov/news/press/2006-19.htm
https://www.nytimes.com/2017/02/10/business/dealbook/former-aig-executives-reach-settlement-in-accounting-fraud-case.html
https://www.cbsnews.com/news/aig-maurice-hank-greenberg-accounting-fraud-settlement/
https://www.huffpost.com/entry/aig-fraud-history_n_178545?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAA0JRRftnmhVObDxYioVJnbeKlY4xEM26kPhEGngaBsbmRRM9XrSSknm1jqld_gNG8TYy2lLosGyzq5e3uMxfUyVRrQUVlGZ97D8t2a0BmoAncBX4STbZz8Cm1SPxlBgrnONn7VPhUSRUg0xcglxa5wwa9aQMDm07x1owKRUmCi7
Accounting Fraud
Greenberg "initiated, participated in and approved these two transactions”
A.I.G.’s public filings “inaccurately portrayed the accounting, and thus the financial condition and performance for A.I.G.’s loss reserves and underwriting income.”
Participated in two sham deals between 2000 and 2004
General Reinsurrance Company and Capco
Intention of deals: Make AIGs reserves look healthier
"Improperly add a total of $500 million in phony loss reserves to its balance sheet in the fourth quarter of 2000 and the first quarter of 2001"
The company admitted to improper accounting, irregularities, accounting fraud, and the intent to deceive.
AIG Financial Products Group hid losses on investments related to credit default swaps