Woo vs. Harmon - Witness Maurice "Hank" Greenberg

THE UNITED STATES DEPARTMENT OF JUSTICE

OFFICE OF THE U.S. TRUSTEE

David C. Farmer, Successor Trustee
vs.
Bobby N. Harmon

(Formerly Mary Lou Woo vs. Harmon and James Nicholson vs. Harmon)

CV05-00030 DAE/KSC

United States District Court, District of Hawaii

Judges: David A. Ezra; Kevin S. Chang

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DEFENDANT’S WITNESS

MAURICE “HANK” GREENBERG

Address to be determined.

Maurice R. "Hank" Greenberg (born May 4, 1925 in New York City) is an American businessman and former chairman and CEO of American International Group (AIG), the world's largest insurance and financial services corporation. He is currently chairman and CEO of C.V. Starr, Inc., a diversified financial services firm with assets of $3.5 billion.

In 1962, Greenberg was named by AIG's founder, Cornelius Vander Starr, as the head of AIG's failing North American holdings. In 1968, Starr picked Greenberg as his successor. Kenneth Starr, the independent counsel who prosecuted President Clinton, is the nephew of Cornelius Starr.

Maurice Greenberg is a billionaire whose worth is roughly $3.6 billion. He is the father of Jeffrey W. Greenberg, former chairman and CEO of Marsh & McLennan Companies (MMC), and of Evan G. Greenberg, president and CEO of ACE Limited. Together, the father and his sons controlled a major portion of the insurance industry.

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June 15, 2009

AIG lawyer: Ex-top exec plundered retirement plan

By MADLEN READ, AP Business Writer Madlen Read

NEW YORK – The former top executive of American International Group Inc. plundered an AIG retirement program of billions of dollars because he was angry at being forced out of the company, a lawyer for AIG told jurors Monday at the start of a civil trial.

Attorney Theodore Wells told the jury in Manhattan that former AIG Chief Executive Officer Maurice "Hank" Greenberg improperly took $4.3 billion in stock from the company in 2005, after he was ousted by the company amid investigations of accounting irregularities.

"Hank Greenberg was mad. He was angry," Wells said in U.S. District Court of the emotional state of the man who, over a 35-year-career, built AIG from a small company into the world's largest insurance company.

Wells said that Greenberg, within weeks of being forced out in mid-2005, gave the go-ahead for tens of millions of shares to be sold from a trust fund. The fund was set up to provide incentive bonuses to a select group of AIG management and highly compensated employees that they would receive upon their retirement.

Greenberg, 84, has contended through his lawyers that he had the right to sell the shares because they were owned by Starr International, a privately held company he controlled.

Starr International was named after Cornelius Vander Starr, who created a worldwide network of insurance companies in the early 1900s.

AIG maintains that Starr and Greenberg, his protege and successor, decided in the late 1960s to organize the various companies under one holding company, AIG.

Starr International remained a private company and its shareholders decided in 1970 that the amount that its shares of AIG were worth above book value of about $110 million should be used to compensate AIG employees, AIG has said.

The embattled insurer is trying to reclaim the money from Starr it says was wrongly pocketed through stock sales by Greenberg.

http://news.yahoo.com/s/ap/20090615/ap_on_bi_ge/us_aig_trial ~ ~ ~

March 17, 2009

Hank Greenberg Shares The Blame For AIG's Pain

Robert Lenzner, Forbes

The $170 billion bailout of AIG and the $165 million bonus outrage are the result of reckless behavior by AIG and most especially by its egomaniacal former chairman, Maurice "Hank" Greenberg.

This supposed paragon of higher finance was just plain playing Russian roulette with his shareholders' money, destroying nearly $200 billion in equity and putting an onerous cost on Uncle Sam and taxpayers....

As we now understand, much of the $170 billion was not to bail out AIG . Rather, it was to bail out the brand-name masters of the universe in global finance--Deutsche Bank, Société Générale, Barclays, Goldman Sachs, Merrill Lynch and Morgan Stanley--that would have lost over $100 billion if Uncle Sam had not stepped in and made good on AIG's obligations to these firms.

The $165 million in bonuses were contractual liabilities to the foolish employees who lost the money that required the bailout by Uncle Sam. No wonder the outrage toward AIG has raised the hackles of Federal Reserve Chairman Ben Bernanke, Obama economic advisor Larry Summers, the president himself and Treasury Secretary Timothy Geithner. You can see why $165 million in bonuses slipped between the chairs: It was peanuts compared with other losses.

In the pre-2005 era of "Tiny" Hank, a special derivatives trading operation, AIG Financial Products, was established at his behest in a holding company, AIG, that had no capital resources but did have the goodwill of the AIG insurance operations' highly valued AAA credit rating.

The deal Greenberg struck was to give the AIG Financial Products executives 30% of the revenues from this operation, an enormous motivation to write as much business as they possibly could. Moreover, its holding company had no regular oversight by AIG's board and was not regulated by any government body. The compensation arrangements were then, and still are, a recipe for disaster. As we know, disaster struck.

It was reckless to place an unregulated holding company on top of profitable insurance operating companies across the globe. It was also reckless to guarantee $500 billion of derivatives contracts to insure the capital of highly leveraged European banks and U.S. investment banks. It was foolish to back securities secured by mortgages that no one could possibly value.

AIG Financial Products had no reserves against loss, and it did not hedge $1 of the $500 billion in contracts. This means that the largest insurance company was betting it would have little or no losses on these hugely leveraged, speculative arrangements. This is more than cowboy capitalism. This is a case study of how to lose $200 billion.

In the latest bailout chapter, Croesus has learned that Goldman Sachs got $4.8 billion that AIG owed it for a ridiculously risky stock-lending operation, another numbskull bit of tomfoolery ordered by Greenberg. Goldman also received $2.5 billion for credit default swaps gone bad.

An astute observer of Rick Sanchez's CNN show raised the right nitty-gritty question: Why should a bunch of executives responsible for the largest loss in American corporate history be awarded $3 million bonuses? Just because a contract was signed a decade ago assuring them of the money no matter the impact on the company? The public has a right to a proper answer, and that's the thrust of Sanchez's reaching out.

What taxpayers may not know is that Greenberg was ousted by his board of directors in 2005 after AIG's accountants refused to approve the financial statements, and that the Justice Department still regards him as an unindicted co-conspirator of another scandal in the insurance industry. Or that he still has never heard from the Securities and Exchange Commission about whether he is a target of its investigation into this other scandal that resulted in one AIG executive being sentenced to prison.

Some tougher observers in the financial community are outraged. They believe that AIG should have been split into a good bank/bad bank setup. The holding company should have been sunk, and the losers--all very big boys, actually the bullies of the bourses--should have taken their lickings.

"If Deutsche or Société Générale or Goldman or Barclays made a bad decision, a lousy trade, why should the American taxpayer make it good?" they clamor. Why should the losers everywhere, in other nations, have their losses paid for by American taxpayers? Shareholders might want to write their pusillanimous representatives in Congress about that.

At a minimum, Congress should hold hearings with both Geithner and Bernanke testifying. President Bush's Treasury secretary, Henry Paulson, should be remanded to the witness chair. Greenberg should be put under the harsh spotlight of public scrutiny too, instead of being allowed to shoot his mouth off on CNBC or Bloomberg, where his inquisitors are invariably obsequious.

Maybe his rotten arrogance will be displayed for all to see. He's one of the most ballyhooed "best and brightest" of finance to have let us all down. If we have to pay for it, we should at least be given the truth, the whole truth, so help me God.

Every mutual fund, endowment and family office drank Greenberg's Kool-Aid, and trusted whatever he told them. What is not yet known is how the company was able to report steady 15% annual profit gains year after year, or all the details of why AIG's accountants would not approve the company's financial results for 2005. In the end, Greenberg's legacy will be shabby.

Forbes.com

http://video.forbes.com/fvn/ini/sf_aigspecial031709

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NEW DISCOVERY (03-03-09): More evidence of fraud, tax evasion, racketeering and undisclosed conflicts of interest involving various parties in this case:

March 3, 2009

AIG's Ex-CEO Greenberg Sues Company

The Associated Press

NEW YORK -- The former chief executive officer of American International Group on Monday sued the company he led for 38 years, saying AIG misled investors about its exposure to subprime mortgages.

Maurice "Hank" Greenberg, 83, claimed in papers filed in federal court in Manhattan Monday that the company, once the world's largest insurer, has ruined his fortune by lying about its financial health.

The lawsuit says Greenberg, who served as AIG CEO from 1967 until he retired in March 2005, was the New York-based company's largest non-institutional shareholder. Christina Pretto, a company spokeswoman, said: "We believe the suit is without merit and we will defend ourselves vigorously."

AIG's stock fell to 42 cents Monday, as the government threw a stunning new $30 billion lifeline to the insurance giant, even as it confirmed it lost more than twice that much, $62 billion, last quarter. The source of trouble for AIG, which has 74 million customers worldwide and operations in more than 130 countries, is its business insuring mortgage-backed securities and other debt against default. That business imploded once the credit crisis struck with force.

The government has now made four separate efforts to save the company, totaling more than $170 billion.

Greenberg was forced out of AIG amidst a controversy in spring 2005 when the company restated its financial statements for the previous five years, acknowledging accounting improprieties, including "improper or inappropriate transactions."

New York regulators later accused AIG, Greenberg and the company's former chief financial officer of orchestrating an accounting scheme that made AIG's financial picture appear brighter than it was, misleading both investors and regulators.

The Street

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< < < FLASHBACK < < <

July 1, 2005

[American International Group is the latest in a series of large-scale enterprises whose fraudulent accounting practices have recently seen the light of day. AIG is a very big fish, not only because of the quantities of money involved but because of long-standing connections to US intelligence. This is deep stuff, reaching back to the Vietnam War, the Philippines, and the post-1989 looting of Russia. Chin provides abundant sources and links - a timely exposé. - JAH]

Target: AIG

Fraud probe of Maurice "Hank" Greenberg intensifies

By Larry Chin, From The Wilderness

July 1, 2005 1300 PST (FTW) American International Group's Maurice "Hank" Greenberg is now the target of multiple investigations into the orchestration of sham transactions, the inflation of reserves, illegal stock trades, deception, and book-cooking.

Super-elite Hank Greenberg - a legendary member of world planning groups (Council on Foreign Relations, the Bilderberger Group, the Trilateral Commission) and the Heritage Foundation, a former candidate for CIA director (1995), Bush family crony, and high-level functionary for all US presidents stretching back to Kennedy - remains supremely confident, and defiant. His net worth is still at least $3 billion. Greenberg has transferred hundreds of shares of stock to his wife and Greenberg family trusts. Greenberg is being defended by the high-powered attorney David Boies (of Bush v. Gore fame).

Many long-time critics of AIG are justifiably skeptical that the Spitzer case is anything more than another limited hangout - a "whiter shade of Enron" - that will permit Greenberg to skate. Although recent activity leaves the prospect of criminal charges open, Spitzer "reassured" Wall Street that criminal charges are not likely.

Besides questions about how aggressively Spitzer will pursue the evidence, there are conflicts involving Spitzer himself. According to the New York Post, Spitzer received $18,500 in campaign contributions from 16 attorneys from Paul, Weiss, Rifkind, Wharton & Garrison, where Spitzer once worked as an associate - and which currently represents AIG.

Where the real bodies are hidden

Although Greenberg resigned as CEO and chairman of the AIG board, Greenberg still manages Starr International (SICO) and C.V. Starr. SICO and C.V. Starr (which was already under fire for millions in diverted commissions and questionable executive pay) are AIG private holding companies that control billions in AIG stock. More importantly, the Starr companies constitute the conglomerate's original roots as an intelligence-related proprietary founded by OSS agent Cornelius Vander Starr.

In other words, Greenberg remains in charge of the (real) "baby."

C.V. Starr's involvements in US covert operations and Southeast Asian opium trafficking going back to World War II, and connections to legendary CIA/OSS figures (Paul Helliwell, Tommy Corcoran), and infamous CIA fronts (Civil Air Transport, Sea Supply, Air America/Pacific Corp) are exposed by Peter Dale Scott in his book Drugs, Oil, and War: The United States in Afghanistan, Colombia, and Indochina.

TIME magazine's June 20, 2005 profile of the irascible Greenberg, "Down But Not Out" is written like a tribute (evidenced by the title). Still, even this breezy piece confirms how Greenberg has functioned as a career agent and strongman, deeply involved in America's most important Eastern operations for decades, for anyone with a grasp of history:

Greenberg was routinely the first foreigner to penetrate "politically combustible countries like Romania, Iran, Vietnam, and other parts of the Far East", and usually the first to be permitted to open business offices in these countries.

Greenberg, a "private citizen" was involved in sensitive high-level negotiations with (and occasional bullying of) Asian leaders, from the Philippines' Ferdinand Marcos to China's Zhu Rhongji.

Greenberg was among the top Wall Street elite who spearheaded the "free market transformation" of Russia in the early 1990s (which ultimately looted the country). (Note: Ruppert's FTW investigation revealed that as insurance carrier for the Bank of New York, AIG was indirectly linked to the laundering of up to $10 billion in criminal money out of Russia by the BoNY. Tip of the iceberg?)

Greenberg is a trustee of the Asia Society, founded by John D. Rockefeller III, where he sits alongside the likes of Richard Holbrooke (an AIG director), John D. Rockefeller IV, Nicholas Platt, and other members of the elite. The Asia Society plays a significant role in global geostrategy. (A just-concluded conference on the future of energy-rich Kazakhstan is further evidence of this.)

Will any probe follow the trail from the Wall Street business-as-usual swindles, into the heart of an American empire that sustains itself on destruction?

In "Enron: Ultimate Agent of the American Empire", this writer penned the following:

"In portraying Enron as a 'scandal', and as an isolated case of overheated capitalism and 'unusual political influence', the American corporate media and congressional investigators are avoiding the truth: Enron, like many multinational corporations, has functioned as an operational arm of the US government, and as a weapon of economic, political and territorial hegemony.

"In a "free market world" in which the goals of the state, corporations and the national security apparatus are indistinguishable… and government and business elites, linked by longtime ties, move seamlessly between public and private sectors, the hydra that is Enron is nightmarishly uncontroversial - and quintessentially American."

AIG and Greenberg are equally powerful examples of this same milieu.

But as noted by Michel Chossudovsky (CovertAction Quarterly, Fall 1996), "Global crime has become an integral part of an economic system with far-reaching social, economic and geopolitical ramifications… the international community turns a blind eye until some scandal momentarily breaks through the gilded surface." At such a level, business is crime, and crime is business. The players operate right out in the open. Their ticker symbols fill business pages, and crawl across television screens every weekday morning. Their names, photos, and backgrounds are printed in glossy annual reports.

In a totalitarian Bush World in which the judicial system is irrevocably corrupted, crimes of global magnitude occur on a daily basis (and go unpunished), and the media functions as the Empire's handmaid, what is the likelihood that "almighty" Hank Greenberg - "our man in Asia" - will get his just due?

Don't hold your breath.

www.fromthewilderness.com/free/ww3/070105_target_aig.shtml

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NEW DISCOVERY (10-07-08):

October 6, 2008

PwC Zapped in $97.5-million Settlement

The auditor, accused by Ohio of violating securities laws in its work with AIG, will pay one of the highest amounts ever for an accounting firm in a class action.

Alan Rappeport, CFO.com

PricewaterhouseCoopers agreed to pay $97.5 million to the state of Ohio to settle a class-action lawsuit on behalf of investors in troubled insurer American International Group, which uses PwC as its independent auditor.

The "partial" settlement, on Friday, came after the Ohio Public Employees Retirement System, the State Teachers Retirement System, and the Ohio Police and Pension Fund filed a lawsuit seeking damages for investors who bought AIG securities from 1999 to 2005. In the complaint, PwC was accused of violating securities laws relating to a market division scheme allegedly involving AIG that was disclosed in 2004 and improper accounting for reinsurance and other transactions.

In May 2005, AIG's accounting problems led to a $3.9-billion restatement, and removal of former CEO Maurice Greenberg.

The settlement is among the 10 highest to be paid by an accounting firm to settle a securities fraud class action lawsuit, according to Nancy Rogers, Ohio's attorney general. The arrangement, however, still needs to be approved by the U.S. District Court for the Southern District of New York in Manhattan.

"This important settlement represents a tremendous result for investors," said Chris Geidner, principal assistant attorney general. "We are pleased with this milestone and will continue to vigorously pursue investors' claims against the remaining defendants in the case."

"We have decided to settle the case at this stage to avoid the enormous litigation costs that would be incurred if the case continued against the firm, while at the same time eliminating any potential exposure," said Steve Silber, a PwC spokesman told The Columbus Dispatch. "The settlement does not contain an admission of wrongdoing by the firm, and we continue to believe that our work was in accordance with professional standards."

AIG currently is facing another lawsuit filed in May by the Jacksonville Police and Fire Pension Fund. The Florida fund accused the insurer of manipulating the market by making false statements about its financial health before disclosing a first quarter loss of $7.8 billion. PwC is not implicated in that lawsuit and in February it gave a warning sign of AIG's problems when it found that there was a "material weakness in its internal control" relating to the accounting of its credit default swaps portfolio.

Last month the U.S. government agreed to an $85 billion bail out of AIG in exchange for warrants to purchase 80 percent of the company, which is selling off several units of its business to repay the loan.

http://www.cfo.com/article.cfm/12371528?f=alerts

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NEW DISCOVERY (07-06-08):

July 1, 2006

Bear Stearns: Let’s Throw in the Ace (Greenberg)

The Bear Stearns Companies, Inc. is the parent company of Bear, Stearns & Co. Inc., one of the largest and best-known global investment banksand securities trading and brokerage firms in the world. The company was founded in 1923 and serves corporations, institutions, governments and individuals. The company's business includes corporate finance, mergers and acquisitions, institutional equities and fixed income sales, trading and research, private client services, derivatives, foreign exchange and futures sales and trading, asset management and custody services. Through Bear, Stearns Securities Corp., it offers global clearing services to broker dealers, prime broker clients and other professional traders, including securities lending.

The former CEO of Bear Stearns was Alan (“Ace”) Greenberg, currently chair of the board, and is the cousin of Maurice (“Hank”) Greenberg and part of the AIG group of course.

9/11

Bear Stearns was named one of the inside traders of 9/11. Their stocks were traded 60 times the usual amount as well.

Bush family

Bear Stearns, of course, is where the Bush family, the Cheney family, George Schultz, James Baker, etc. all do business. It is the leading brokerage firm of the great and all powerful Bushonian Cabal.

Harken Energy, Texas Rangers and Clear Channel

by Al Martin

The $7 million that Bush Jr. put into the deal came from the Harken Energy stock fraud. He and his father George Bush Sr. entered into a conspiracy with Bear Stearns and others to artificially manipulate the price of Harken Energy stock, wherein the Bush Family illicitly proceeded to trade their shares "against the box," through the Pilgrim Investment Trust, the Bush Family-controlled Panama-registered investment entity, wherein the price of Harken Energy stock was pumped up from 1-1/ 4 up to 7-3/8 and then dumped all the way back down again.

This whole round trip as it were was accomplished in only about 4 months time. By being long at the bottom through the Pilgrim Investment Trust with shares that they had borrowed from Bear Stearns -- by the way. They didn't even put up their own damn shares. It's one thing to commit a scam, but the Bushes added a new twist. They commit scams with Other People's Money. They take it one step further by using OPM to commit the scams. Thus they generate the money for nothing.

So then Bush Jr. takes the $7 million out of the Harken Energy Stock Swindle that he and his father orchestrated with their longtime ally Ace Greenberg, chairman of Bear Stearns. He then invests in a syndicate to buy the Texas Rangers sports franchise. Then Bush becomes part of the general management of the team and proceeds to run the team into the ground, financially speaking. Then he is allowed to sell his interest back to the syndicate, including his shares in Mays Hicks for 4 times what he paid for them. Despite the fact the franchise was worth only half of the purchase price since he had "managed" it . In order to bail the whole deal out, he as governor of Texas then authorizes the expenditure of $345 million of public monies in order to build the new stadium and surrounding complex for the Texas Rangers....

The syndicate was composed of the Hicks Muse crowd essentially. James Baker was an investor in it and so was Dick Cheney. Then how this ties in to Clear Channel Communications is that Hicks was the regent of the University of Texas, which is another whole scam. This is a scam within a scam. The regents of the University of Texas is an infamous scam....

Everybody promoted Clear Channel stock then, not only Bear Stearns, but Merrill Lynch and JP Morgan, and they ran it up. They got everybody to promote the stocks. so it got as wide as possible distribution. All these stocks were coming out of Clear Channel, and there was an enormous amount of money coming in with virtually no accountability as to how they have to spend that money. Then they can start paying 2 or 3 times what radio stations are worth just to own them. It was simply for the ownership of the market. It doesn't have anything to do with making any money. And yet the stock, which is now in the 40s, still trades in what is over a 35 P/E I think. It is still considered a high P/E stock....

http://sci.rutgers.edu/forum/archive/index.php/t-23809....

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NEW DISCOVERY (04-22-08): David Farmer’s undisclosed connections with AIPAC and Henry “Hank” Greenberg:

From Exhibit: “CONNECTING THE DIRTY DOTS TO AIPAC”:

David C. Farmer, Successor-Trustee vs. Harmon

(Formerly Woo vs. Harmon & Nicholson vs. Harmon)

CV05-00030 DAE KSC

U.S. District Court For the District of Hawaii

Judges: David A. Ezra; Kevin S. Chang

—

DEFENDANT’S EXHIBIT

—

A few words of explanation:

In his "MEMORANDUM IN OPPOSITION TO DEBTOR'S MOTION FOR ORDER TO DISAPPROVE APPOINTMENT OF DAVID C. FARMER AS SUCCESSOR TRUSTEE", filed with the Court on August 24, 2007, the Trustee's attorney, Steven Guttman, Esq., of the law firm, Kessner Umebayashi Bain & Matsunaga, stated to the Court:

"... Harmon is once again attempting to create issues of conflict where none exist by attempting to draw connections between phantom dots."...

Mr. Guttman does not elaborate beyond this simple statement of HIS PERSONAL OPINION, as to WHICH of the thousands of connections I have cited that he wishes the Court to accept, without question, as being merely "phantom dots". In other court filings, Mr. Guttman has characterized my Motions as consisting of "conspiracy theories" -- again with no specific references.

Despite these unnamed "phantom dots" and "conspiracy theories", the Court has blithely and unquestionably gone along with Mr. Guttman's opinions and has repeatedly denied ALL Motions that I have made. In fact, both Courts involved have ruled that the Court Clerk shall not accept any future filings from me without the Courts' prior approval - which it has repeatedly declined to give.

Therefore, due to the fact that I continue to discover new, material FACTS almost daily, I am preparing a set of NEW EXHIBITS in which I intend to document the financial, professional, personal, and political connections between the many various entities involved in this case.

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The following is a listing of named witnesses in this case who have factual connections with the subject entity. Each underlined name has been linked to a detailed description of that witness to enable the reader to more easily CONNECT THE DOTS TO...

Judith Neustadter Fuqua

James B. “Jim” Nicholson

Dan Inouye

LEARN MORE ABOUT AIPAC:

http://www.stopaipac.org/

http://www.stopaipac.org/spystory.htm

www.hadassah.org/education/content/influentials_israel.asp

http://www.jewishaz.com/jewishnews/021108/hawaii.shtml

http://www.tbrnews.org/Archives/a1721.htm

http://www.antiwar.com/cole/?articleid=3467

http://www.philipweiss.org/mondoweiss/2007/06/lfow.html

http://www.sourcewatch.org/index.php?title=AIPAC

http://www.commondreams.org/archive/2008/01/03/6138/

http://www.youtube.com/watch?v=zidtiC-UPNU

http://www.franklingate.com/aipac-cheney.htm

http://www.kycbs.net/AIPAC-Obama.mht

http://www.kycbs.net/AIPAC-Bush-Abramoff-Greenberg.mht

http://www.kycbs.net/AIPAC-Mische-7-11-7.mht

http://youtube.com/watch?v=vwV6O5AGKyw&feature=related

http://www.youtube.com/watch?v=B8gHmJUa720

http://ifamericaknew.com/us_ints/mc-aipac.html

http://www.antiwar.com/glantz/?articleid=9697

www.literarylotus.com/2007/12/wimr-brian-schatz.html

http://www.kycbs.net/AIPAC-Lingle-Abramoff-Brownstein.mht

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January 7, 2008

Trial Opens for 5 Former
Insurance Execs

By JOHN CHRISTOFFERSEN, Forbes, AP

HARTFORD, Conn. - The former chairman and CEO of the world's largest insurer initiated a deal that led to five ex-executives being charged with participating in a scheme to manipulate the company's financial statements, a federal prosecutor said Monday during opening arguments at their trial.

Four former executives of Berkshire Hathaway (nyse: BRKA - news - people )'s General Re Corp. and a former executive of American International Group Inc. (nyse: AIG - news - people ) are charged in the scheme involving AIG's financial statements.

Prosecutor Raymond Patricco said former AIG CEO Maurice "Hank" Greenberg, who has not been charged in the case, started the scheme in 2000, after AIG's stock price dropped 6 percent, representing a loss of $12 billion to shareholders. The price dropped because loss reserves had declined.

"Greenberg and AIG came to Gen Re for this deal," Patricco said.

Attorneys for the defendants denied their clients did anything wrong Monday and said the case involved complex, subjective accounting. They attacked government witnesses - two senior Gen Re executives who pleaded guilty to conspiracy to falsify SEC filings - as out to save themselves.

They also said their clients did not benefit financially from the scheme.

"This is not Enron or WorldCom," said Anthony Pacheco, attorney for former General Re Senior Vice President Christopher P. Garand, referring to two of the biggest recent business scandals.

Greenberg, who headed New York-based AIG for nearly 40 years, has denied any wrongdoing. He was referred to as an unindicted coconspirator in an indictment.

Allegations of accounting irregularities, including the Gen Re transactions, led to his resignation in 2005.

At issue in the trial of the former executives are two reinsurance transactions between AIG and Stamford-based General Re. Reinsurance policies are backups purchased by insurance companies to completely or partly insure the risk they have assumed for their customers.

Prosecutors said the transactions were initiated by an AIG senior executive to quell criticism by analysts of a reduction in AIG's loss reserves in the third quarter of 2000. The indictment alleges that the aim was to make it appear that AIG increased its loss reserves by about $500 million in 2000 and 2001, pacifying the analysts and investors and artificially boosting the company's stock price.

"But the evidence in this case will show that deal was nothing more than a sham transaction," Patricco said. "The defendants in this case knew what appeared in the contracts was a lie."

Prosecutors said Greenberg called his friend, former General Re CEO Ronald Ferguson, who is one of the defendants, and told him that AIG wanted to increase its loss reserves by $500 million, but did not want to bear the risk.

Ferguson agreed to the deal Greenberg proposed, Patricco said.

For a reinsurance transaction to be legitimate, there must be a transfer of risk, which was lacking in the deal in question, prosecutors said.

"The evidence in this case will show the defendants knew this would be a no-risk deal for AIG," Patricco said.

Greenberg and the company later reported that the loss reserves had gone up.

"Plain and simple, ladies and gentlemen, the statements about AIG's loss reserves were lies," Patricco said.

In opening arguments, Patricco never mentioned billionaire investor Warren Buffett, who could play a role in the trial. Some of the executives say they believed Buffett was involved and supported the deal that led to the charges. Buffett leads Berkshire Hathaway.

But prosecutors say they only named Buffett, who has not been charged with any wrongdoing, as a potential witness to rebut any suggestion by the defense that he was involved in or approved the deal.

Michael Horowitz, Ferguson's attorney, said Monday that his client told Buffett and others about the requested transaction.

"Not a single red cent went into his pocket," Horowitz said.

The former General Re executives charged were Ferguson, chief executive officer from about 1987 through September 2001; Elizabeth Monrad, chief financial officer from June 2000 through July 2003; Robert Graham, a senior vice president and assistant general counsel from about 1986 through October 2005; and Garand, a senior vice president from 1994 until 2005.

Also charged was Christian Milton, AIG's vice president of reinsurance from about April 1982 until March 2005. Patricco said Monday that he lost $360,000 when the stock price dropped.

The defendants have pleaded not guilty to the charges.

AIG filed a restatement in 2005 related to the transactions and agreed to pay a record $1.64 billion in a settlement with federal and New York authorities.

In 2005, two senior Gen Re executives, John Houldsworth and Richard Napier, pleaded guilty to conspiracy to falsify SEC filings in connection with the investigation and are awaiting sentencing.

If convicted of all the charges, Ferguson, Monrad, Milton and Graham each face up to 230 years in prison and a fine of up to $46 million. Garand faces up to 160 years in prison and a fine of up to $29.5 million.

The trial is expected to last about two months.

The indictment:

www.usdoj.gov/usao/ct/Documents/FERGUSON_SS_Indictment.pdf

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December 7, 2007

AIG Discloses $3.75B in Costs in 4Q

Forbes, Associated Press

NEW YORK - This year's credit crisis has cost American International Group Inc. roughly $3.75 billion so far this quarter, the insurer said in a filing with the Securities and Exchange Commission Friday.

AIG's book of credit-default swaps, which essentially provide insurance to lenders against borrowers defaulting, lost $1.05 billion to $1.15 billion so far in the fourth quarter. Even though AIG said it does not expect much of the insured debt to go into default, the market value of the contracts has slipped.

In a presentation to investors Wednesday, AIG said its nearly $97 billion portfolio of bonds backed by mortgage debt has lost $2.6 billion in value since the end of the third quarter.

Most investments linked to home loans have depreciated this year amid decaying credit quality and a drainage of demand for mortgage debt. About 10 percent of AIG's portfolio is invested in bonds backed by mortgages.

December 4, 2007

Buffett May Testify in AIG Fraud Case

Forbes, Associated Press

NEW YORK - Federal prosecutors intend to call billionaire investor Warren Buffett to testify against five former senior insurance executives charged with helping the American International Group to manipulate its financial statements through $500 million in phony transactions, according to court papers filed Monday.

The former executives - four from the General Reinsurance Corporation, a unit of Berkshire Hathaway (nyse: BRKA - news - people ), and one from AIG - were indicted by a federal grand jury in 2006 on charges of fraud, conspiracy and lying to the Securities and Exchange Commission in connection with what the government calls a scheme to inflate AIG's reserves, according to a report first published in the New York Times.

The defendants from Gen Re are Ronald E. Ferguson, the former chief executive; Elizabeth A. Monrad, the former chief financial officer; Robert D. Graham, the former assistant general counsel; and Christopher P. Garand, a senior vice president who was chief underwriter. The AIG defendant is Christopher M. Milton, who oversaw the company's reinsurance activities.

Buffett is the chief executive of Berkshire Hathaway Inc.

Opening arguments in the trial are scheduled to begin on Jan. 7 in a federal courtroom in Hartford, Conn.

June 22, 2007

Out of the Gate:
AIG's Blackstone Stake

Forbes, Associated Press

American International Group Inc. is cashing in on Blackstone Group LP's initial public offering, according to a Goldman Sachs analyst.

The New York-based insurer invested $150 million in Blackstone Group in 1998, and Goldman analyst Thomas V. Cholnoky said in a note to clients that based on his calculations, that stake could be worth $1.9 billion to $2.1 billion.

Blackstone, a private equity firm, priced its IPO Thursday night at $31 per share, the high end of its underwriters' range. Blackstone's owners will receive almost $4 billion in cash plus stock in the new company.

Cholnoky estimates AIG will collect 10 percent to 12 percent of the cash and 48.8 million shares of a publicly traded Blackstone.

Cholnoky said its difficult to estimate the actual book value of the investment because of AIG's limited disclosure about it, but he noted that if the initial $150 million had increased threefold, it would add $1 billion to $1.1 billion to AIG's book value, after taxes. Book value, or the net value of a company's assets, is a common way for investors to determine what insurance companies are worth.

Cholnoky said his estimates are conservative, and AIG's take would increase if the shares do well in the open market.

Shares of AIG fell 41 cents to $71.64, and Blackstone shares rose 4.75, or 15.3 percent, to $35.75 in morning trading.

For more, GO TO > > > AIG: The Un-American Insurance Group

June 12, 2007

AIG, Ex-Chairman at Odds
Over Testimony

Forbes, Associated Press

Three American International Group Inc. executives should be required to give testimony in the New York Attorney General's lawsuit against former chairman Maurice R. Greenberg, argued a brief filed Tuesday by Greenberg's attorneys.

AIG has sought to distance itself from Greenberg, who led the company for more than 30 years until his forced resignation in March 2005 at the urging of then-Attorney General Eliot Spitzer, who later brought civil charges against Greenberg relating to several AIG transactions.

In 2006, AIG paid $1.6 billion to settle a suit brought against it by New York and federal regulators. The suit against Greenberg remains, though it was narrowed down substantially in September, and alleges that as head of AIG he was involved in four sham transactions that misled investors.

Greenberg had previously requested depositions from the executives as part of his defense, and AIG had asked that the request be rejected, and that the three executives not be required to testify.

The executives are Anthony Valoroso, AIG's deputy comptroller, Jeffrey F. Johnson, senior vice president for toxic torts at AIG Technical Services Inc., and Perry Huntington, AIG's senior vice president for environmental, according to Greenberg's brief.

The brief rebuts the Attorney General's assertion that the transactions caused harm to the marketplace, in the form of lowered share prices. Instead, it argues that any harm that occurred was caused by AIG's restatement and other factors, rather than from the original accounting for the four transactions during Greenberg's tenure.

Greenberg's attorneys argue that input from the AIG employees is required to sort out how damaging any particular transactions or restatements might have been.

"Determining the extent, if any, to which the four transactions that form the basis of the amended complaint caused any 'harm to the marketplace' necessarily requires a full investigation of all the transactions identified in the corrective disclosures to the public," the brief said.

An AIG spokesman said the company couldn't comment on the case.

AIG shares fell 11 cents to close at $71.54 on the New York Stock Exchange.

http://www.forbes.com/feeds/ap/2007/06/12/ap3814720.html

June 8, 2007

AIG Settlement Costs $50 Million More

Forbes, Associated Press

American International Group Inc. said Friday a program to help distressed borrowers keep their homes will cost the insurer $50 million more than it thought.

The New York-based financial services conglomerate said it agreed with regulators to implement a program to help clients who may otherwise lose their homes because of mortgage defaults.

Under the Office of Thrift Supervision program, certain borrowers can obtain a refund of some of the fees they paid when they took out mortgages. The program will be administered by three AIG subsidiaries - AIG Federal Savings Bank, American General Finance and Wilmington Finance - and be available to people who borrowed money from AIG Federal Savings Bank through Wilmington Finance between July 2003 and May 2006.

AIG will also donate $15 million over three years to nonprofit organizations that educate people about loans and credit.

At the end of the first quarter, AIG said it was discussing the struggling "subprime" mortgage market with the Office of Thrift Supervision. The insurer initially set aside $128 million to pay for the program. But Friday AIG said it needs to set aside an additional $50 million reserve to pay for the program and the $15 million donation. The reserve will be recorded as an accounting charge for the second quarter.

Shares of AIG fell 25 cents to $71.13 in afternoon trading.

http://www.forbes.com/feeds/ap/2007/06/08/ap3803582.html

December 11, 2006

DP World Hooks Up With AIG

Parmy Olson, Forbes

Remember all the political hullabaloo made over Dubai Ports World earlier this year? (See: " Dubai Divide.")

A chorus of politicians had pointed frantically to what they said was a threat to America’s security when the Arab shipping company looked set to pick up several major U.S. port operations via its $6.8 billion acquisition of P&O.

Somewhat alarmed at the protests, DP World offered last March to "transfer" P&O’s American interests to an American company -- and on Monday announced it had finally found a friend in AIG Global Investment Group.

News of the contract was applauded by investors, who sent shares in AIG up 0.9% or 65 cents to $71 in late afternoon Monday trading in New York.

The businesses, spanned six major seaports in New York/New Jersey, Philadelphia, Baltimore, Miami, Tampa and New Orleans, were reportedly worth around $700 million. But DP World said only that it had received a “fair” price, and added that it was “disappointed to be exiting the U.S. market.”

One person who won’t be disappointed is Democratic Senator Charles Schumer, one of the more vocal critics of the deal. Last February, he’d questioned if Dubai could be trusted to “operate our ports in this post 9/11 world."

The mollified politician now says the AIG contract is “an appropriate final chapter to the book on the Dubai Ports World deal.”

The deal should close in the next few months and AIG, a New York-based insurance company, says it will be "one of the industry leaders in setting standards for port security."

DP World is overseen by Sheikh Mohammed bin Rashid Al Maktoum, the Prime Minister of the United Arab Emirates and ruler of Dubai. While neither he nor DP World have had any apparent links to terrorism, critics of the deal had cited alleged financing by the UAE of the Sept. 11 terror attacks, and the government’s prior support of the Taliban regime.

For more, GO TO > > Aloha, Harken Energy; The Strange Saga of BCCI; The Carlyle Group; Halliburton from Hell; The Impeachment of George W. Bush; Investigating Investcorp; The Department of Homeland Security; The Secrets of Henry Paulson, Vampires in The Treasury Department; Who’s Guarding the Hen House?

December 1, 2006

Greenberg buying up
New York Times shares

By Jerry Mazza, Online Journal

“Hammering Hank,” as he’s better known to colleagues, is at it again. According to Reuters, AP, and CNBC at msn.Money, Maurice “Hank” Greenberg has been buying up shares of The New York Times Company to try to break the Sulzberger family’s “hold” on it.

Watch out!

As you may remember, Greenberg resigned as CEO from the board of AIG (American Insurance Group) in February 2005, and left the company on March 14, following “regulatory inquiries” made by Attorney General Spitzer (recently elected New York governor). Subsequently AIG and its new CEO Martin Sullivan paid a fine of over $1.6 billion.

Greenberg’s former satellite firm, Marsh & McLennan Companies (MMC), the world’s largest insurance broker, was run by Hank’s son Jeffrey Greenberg from 1993 to 2004. Jeffrey left 11 days after Spitzer’s civil action against MMC was presented on Oct 14, 2004. In January 2005, Marsh was forced to pay $850 million in fines to policyholders for steering clients to insurers from which it received lucrative payoffs.

Both Greenberg Sr. and Jeffrey Greenberg are Council on Foreign Relations members.

By the way, Marsh also bought Kroll, the security and military contracting company that recently pulled out of Iraq. Just a bit of back story about the Greenberg familia. There’s more linked in my September 29 article in Online Journal. And there’s more in my October 9 article, Answering the mail re: Greenberg & AIG. In it, there is a notable quote by Michael Ruppert (From The Wilderness):

"FTW has also conducted an extensive investigation into AIG and its predecessors, including the C. V. Starr Insurance Companies, revealing deep connections to US intelligence dating back to the Office of Strategic Services (OSS) in World War II. These connections include documented CIA operatives connected to drug smuggling from Southeast Asia and a current board member, Frank Wisner, Jr., whose father was a key figure in the creation of the CIA. History, as well as AIG's current operations suggest, that these relationships continue unabated today...

" . . . AIG has also been connected, albeit indirectly, to a major money laundering case. As the insurance carrier for the Bank of New York (BoNY) they are defending BoNY in a suit filed this year by BoNY shareholders charging mismanagement of the bank. That suit arose from revelations (See FTW Vol II, No.7, 9/99) in the major media that BoNY had been involved in laundering between $7 and $10 billion in criminal money out of Russia during the 1990s under its Chairman, Thomas Renyi.

A credible source has told me, but I have not been able to confirm it, that AIG also insures the U.S. Department of Justice which was charged with investigating BoNY and which decided not to file criminal charges in 1999.”

You have to ask yourself, with a background and resume like this, is this man qualified to own and run a major newspaper? And, if given his druthers, is he also fit to make a bid for the Tribune Company, which owns, among others, the Chicago Tribune, the Los Angeles Times, Newsday and a host of TV stations? He has sold more than $1.5 billion in AIG shares since May, the articles report, it would seem he has some cash in hand for buying.

Do we need another Rupert Murdoch, eager to envelope and steer more media to the right? Do we need Maurice Greenberg, a man who grew out of a corporate culture with long-standing affiliation to the OSS and CIA, an insurance company reputedly involved in money-laundering and drug-smuggling while operating conveniently in some 135 countries?

What’s more, Greenberg has had some help in his Times Company plans from Morgan Stanley, which “submitted a proposal to the [Times] Company that is aimed at cutting the Sulzberger family’s long-standing control of the company by changing the voting structure so that shareholders have equal voting rights.”

It would seem that such an act would compromise the Time’s company’s editorial content, given a block of voters or single large share-block voter, who might chose to interfere in policy.

Additionally, AIG, Greenberg, and Morgan Stanley share another tie mentioned in my article The PROMIS of 9/11 and beyond. I think the opening paragraph underscores a darker side of AIG and Morgan Stanley’s business. The italics are mine...

As whistleblower Richard Grove points out, SilverStream (the software company he worked for at the time of 9/11), served not only AIG (American Insurance Group), it also built trading applications for Merrill Lynch, Deutsche Bank, Banker’s Trust, Alex Brown, Morgan Stanley, and Marsh McLennan. With this impressive list, according to Grove, “you pretty much had the major players involved in the financial aspect of the 9/11 fraudulent trading activity.”

Thus, every fiber in me smells a rat in this alliance.

Let me add, too, I am a New York Times reader, online and off. I don’t think it’s a perfect newspaper. I prefer alternative media. But I respect its right to be, and not to be interfered with by the likes of Maurice Greenberg or Morgan Stanley or any of the brokerage firms above listed. The news, and whatever truth The Times brings, should not be for sale to these power brokers.

Thank you, I’ll take the Sulzbergers.

http://onlinejournal.com/artman/publish/printer_1492.shtml

See also: Parrots in the Newsroom

November 13, 2006

Delaware court approves $50M settlement
covering ex-Hollinger directors

Canadian Press

CHICAGO (CP) - Delaware Chancery Court has approved a $50-million settlement involving Henry Kissinger, Marie-Josee Kravis and other former directors of Hollinger International Inc.

Sun-Times Media Group Inc. (NYSE:SVN), as Hollinger International now is known, said Monday that the settlement, announced in May 2005, will be funded from its officers-and-directors liability insurance policies.

The claim had been filed in 2003 by Hollinger International investor Cardinal Value Equity Partners, whose law firm pockets $2.5 million of the $50 million being paid to Sun-Times Media.

As part of the settlement, Cardinal's claims against deposed Hollinger chairman and CEO Conrad Black and others, including his wife Barbara Amiel Black and associates Daniel Colson and David Radler, are dismissed without prejudice.

Sun-Times Media said the dismissal without prejudice enables the company to continue pursuing its claims against Black and the others.

This litigation has been stayed pending the outcome of the criminal cases against Black and others, who were charged last year in Chicago.

Sun-Times Media "is committed to continuing our efforts to obtain additional recoveries," Gordon Paris, the company's CEO and chairman of a special committee of the board, said Monday.

The former directors covered by the Cardinal settlement include former U.S. state secretary Kissinger, former Illinois governor James Thompson, former U.S. diplomat Richard Burt, and Kravis, a Quebec-born economist formerly married to symphony conductor Charles Dutoit and now the spouse of New York financier Henry Kravis.

Other ex-directors included in the agreement are Shmuel Meitar, Dwayne Andreas, Raymond Chambers, Robert Strauss, Alfred Taubman, Lord Weidenfeld and Leslie Wexner.

The settlement contains no admission of wrongdoing.

The Delaware court also approved a previously announced $2.8-million settlement with former company executive Peter Atkinson, who was once part of Black's inner circle who later agreed to help Hollinger International's investigation.

Sun-Times Media, which at its late-1990s peak under Black's direction included Canada's dominant group of big-city newspapers, the Telegraph of London and the Jerusalem Post, has shrunk to the Chicago Sun-Times and an assortment of other Chicago-area publications.

Cardinal was among the first to raise complaints about Black's corporate governance, which ultimately led to his removal from the company's lushly appointed executive suite amid an avalanche of ongoing legal proceedings....

www.cbc.ca/cp/media/061113/X111322U.html

~ ~ ~

AIG Subsidiary, Chubb Allowed to Pay
Hollinger Director Accord

Bloomberg

May 31 (Bloomberg) -- American Home Assurance Co., a unit of American International Group Inc., and Chubb Corp. may pay $50 million to cover a settlement by ex-Hollinger International Inc. directors sued by a minority shareholder, a Canadian judge ruled.

In exchange for the $50 million, Hollinger shareholder Cardinal Capital Management LLC agreed to drop its lawsuit against directors accused of disregarding the alleged looting of the company by ex-Chief Executive Officer Conrad Black.

The proposed payout was opposed by excess insurers Ace Ltd., Zurich Insurance Co. and Royal Insurance Plc, which cover losses over $50 million. Having exhausted the limits of American Home and Chubb coverage for Hollinger directors, the May 23 ruling puts the onus on Ace, Zurich and Royal to cover future settlements in the case.

Ontario Superior Court Judge Colin Campbell's ruling, ``held, in effect, that they can't just veto the settlement,'' Eric Hoaken, lawyer for Hollinger International, said in a telephone interview. ``I think it's an important case that clarifies the obligations of insurers.''

Insurance companies generally don't provide coverage for derivative lawsuits, where a shareholder sues on behalf of the company, Gary Luftspring, a lawyer representing Ace, Zurich and Royal, said. Where coverage is provided, it's usually limited to derivative suits where a shareholder has a stake of less than 10 percent in the company, as in this case.

Approval

Chubb, based in Warren, New Jersey, is the second-largest U.S. insurer of corporate boards. American Home is a subsidiary of New York-based American International Group, Inc., the world's largest insurance company. The $50 million payout must still be approved by a judge in Delaware, where the Cardinal suit was initially filed, Hoaken said.

Hollinger International, based in Chicago, publishes the Chicago Sun-Times, among other newspapers.

The company's board ousted Black as CEO in November 2003, sued him and stripped him of the title of chairman the following January. Hollinger International sued Black to recover more than $425 million that it accused him and his associates of stealing to finance lavish lifestyles.

Black, 61, was also sued by his holding company, Hollinger Inc., and by the U.S. Securities and Exchange Commission. He pleaded not guilty to U.S. criminal charges of racketeering, money laundering, wire fraud and obstruction of justice. His trial is set for March 5, 2007.

The case is Re: Hollinger International Inc. No. 05-CV- 285277PD3, Ontario Superior Court, Toronto.

Example fraud:

Tri-Lateral Investment Group

Excerpt from Al Martin's book about
Bush's Harken Energy Fraud

From Demopedia

... The Tri-Lateral Investment Group, Ltd. is also one of the deals (one of the very few deals, perhaps only a few dozen deals in that era by this group of guys) that you could connect Jeb, Neil, George, Jr., Prescott, and Wally Bush.

All five you can put in the Tri-Lateral Investment Group, Ltd. You can put Neil in it vis-a-vis Tri-Lateral's dealings with Neil's Gulf Stream Realty.

Then you back up a step and put Neil Bush into Tri-Lateral Investment Group's dealings with the Winn Financial Group of Denver run by the infamous former Ambassador to Switzerland, Phillip Winn.

You can put George, Jr. in the deal vis-a-vis the Tri-Lateral Group Ltd.'s fraudulent relationship with American International Group (AIG), of which George, Jr. was a part through the same series of fraudulent fidelity guarantee instruments issued on behalf of Harken Energy from American International Group.

Tri-Lateral Investment Group then sold bogus oil and gas leases to AIG.

This is a direct fraud that George, Jr. profited to the extent of (not a lot) $1.6 or $1.7 million.

But it was a clear out-and-out fraud.

www.almartinraw.com/harken.html

External links:

http://www.kycbs.net/AIG.htm

http://www.kycbs.net/Starr-Foundation.htm

http://www.kycbs.net/CIA.htm

http://www.kycbs.net/911-COVERUP-3.htm

http://www.kycbs.net/AlliedWorldAssurance.htm

~ ~ ~

Demopedia

December 11, 2006

2 Sanctioned by SEC
Over PNC Accounting

Associated Press, Forbes

An accounting executive at PNC Financial Services Group Inc. and an outside auditor were sanctioned by federal regulators Monday for their alleged roles in the regional bank's faulty accounting in 2001, said to have inflated earnings by concealing $762 million in potential liabilities.

The Securities and Exchange Commission announced the settlements with Thomas Garbe, who was PNC's director of accounting policy at the time, and Michael Joseph, a former partner with the major accounting firm Ernst & Young, which reviewed the transaction at issue. Garbe and Joseph neither admitted nor denied the SEC's allegations but agreed to refrain from future violations of the securities laws....

The agency had previously alleged that Pittsburgh-based PNC tried to conceal $762 million in sour corporate loans in 2001 by selling them to three partnerships it created expressly for that purpose with insurance giant American International Group Inc.

For a fee, AIG offered to establish special-purpose entities to which PNC could transfer the troubled assets, but there was no actual transfer of risk from the bank to the insurer, according to the SEC.

In a July 2002 settlement of the issue, PNC was not fined but agreed to give the SEC and the Federal Reserve Bank of Cleveland greater access to company records. New York-based AIG signed agreements with the SEC and the Justice Department in late 2004 in which it agreed to pay $126 million to settle allegations of aiding flawed accounting by PNC and Brightpoint Inc.

More recently, AIG agreed last February to pay a record $1.64 billion in a settlement with the SEC and New York state authorities, and apologized 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 phony insurance deals to burnish its earnings and misstated the amounts of workers' compensation premiums it had collected.

November 17, 2006

2 AIG Units Get Subpoenas
From SEC, DOJ

Associated Press

Two units of the insurance company American International Group Inc. have received subpoenas from the Securities and Exchange Commission and the U.S. Justice Department, an AIG spokesman said Friday.

AIG Financial Products received a subpoena from the Justice Department's anti-trust division and a separate unit, SunAmerica, received a subpoena from the SEC, said AIG spokesman Chris Weinans.

In recent days, several companies have received subpoenas related to an investigation of municipal guaranteed investment contracts, or GICs, by regulators.

Municipal GICs are fixed-rate, fixed-maturity contracts that municipalities can buy, like bonds, but they are backed by an insurance company.

The AIG spokesman couldn't give details about the subpoenas, nor could he confirm whether they are related to the GICs investigation, but he said that SunAmerica is involved in issuing GICs.

An XL Capital Ltd. (nyse: XL - news - people ) subsidiary is also among the companies that received subpoenas, XL said Thursday in a filing with the SEC.

Shares of AIG slipped 31 cents to close at $72.05 Friday on the New York Stock Exchange. The insurance company is based in New York.

~ ~ ~

February 9, 2006

Most States to Share
in AIG Settlement

By Michael Gormley (AP), Forbes

Most states will get varying shares of $344 million in back taxes as part of a$1.64 billion settlement reached Thursday between regulators and American International Group Inc., one of the world's largest insurers.

For example, Rhode Island is in line for a $97 million check from AIG whileFlorida is eligible for $52 million and Louisiana and Massachusetts could each get$33 million.

Thirty-five states will share in $42 million in tax reimbursements on worker compensation premiums that New York Attorney General Eliot Spitzer said AIG didn't pay from 1986 to 1995.

In addition, 45 states will share in more than $301 million in assessments, another fee charged by states, that weren't properly paid by AIG during that time. The bulk of the cash is in interest, said David Brown, chief of Spitzer's investment protection bureau.

AIG and its past management had been accused of deceptive accounting practices to mislead investors and regulators. States may either sign a waiver from further action against AIG to collect the payments or pursue separate settlements, Brown said.

AIG said that under the settlement it will pay $800 million for investors who were deceived by AIG's accounting tactics, including a $100 million penalty to the SEC. The SEC will track down those investors harmed by false data that boosted AIG stock.

Another $375 million will go to policyholders harmed by alleged bid-rigging.

New York state will get $100 million for its general fund in penalties and the U.S. Justice Department will get $25 million.

The $344 million to the states comes courtesy of whistleblower Michael Joye.

As AIG's general counsel in 1992, Joye was at the top of his career when he accused AIG's past management of disguising worker compensation premiums and assessments to avoid paying higher state taxes, Brown said Thursday. After what Brown called "a huge internal dustup," the previous management didn't change its ways. So Joye quit one of the largest corporations in America to open a practice in Princeton, N.J.

A year ago, when news of Spitzer's AIG investigation broke, Joye called the attorney general and told his story.

The state Insurance Department and Spitzer's investigators then painstakingly recreated the tax liability since 1992 and came up with compensation that the new AIG management agreed to pay.

"The guy is a hero, really," Brown said. "This is exactly what you hope people would do."

Joye didn't respond to a request for comment.

~ o ~

- A tip of the Catbird’s wing to Michael Joye! Well done, Michael!

~ o ~

(For more, GO TO > > > Tom Kirkondall’s: “AIG is sounding more like Enron all the time,” at http://blog.kir.com/archives/001933.asp)

~ ~ ~

February 6, 1996

Dow Corning, Insurer Settle Implant Lawsuit

By Brian S. Akre, Chicago Sun-Times

DETROIT - The biggest insurance company being sued by Dow Corning Corp. for refusing to pay breast-implant claims settled a large part of the billion-dollar case Monday.

The tentative settlement with American International Group Inc. came after three months of testimony and days before the case was scheduled to go to the jury.

Terms were not disclosed. The settlement involves only some of the policies in dispute between Dow Corning, American International and its subsidiaries, attorneys said.

Robert Marsac, an attorney for Dow Corning, said the settlement represents a significant portion of the case. The company has about $389 million worth of coverage at issue in the trial.

AICPA Case Development Program

~ ~ ~

February 2, 2006

4 Charged With Fraud in
Insurance Inquiry

By Timothy L. O'Brien, New York Times

Three former executives of the General Reinsurance Corporation and a former executive of American International Group have been indicted on charges that they fraudulently manipulated A.I.G.'s finances in order to mislead analysts and investors, the Justice Department said today.

A federal grand jury in Norfolk, Va., charged the four former executives with 13 counts of conspiracy, fraud and false statements.

The individuals named in the complaints, are Ronald E. Ferguson, General Re's former chief executive; Elizabeth A. Monrad, the former chief financial officer; and Robert Graham, the former general counsel. Christian M. Milton, the former head of A.I.G.'s reinsurance operations, was also charged.

Since early last year, federal prosecutors have been investigating General Re andA.I.G. for financial improprieties relating to transactions that artificially inflated A.I.G.'s reserves by $500 million in 2000 and 2001. Those are the transactions that are at the center of investigations by the Justice Department and theSecurities and Exchange Commission.

"Each of the defendants was aware that the true purpose of the transactions was to permit A.I.G. to report and record loss reserves it did not really have to calm analyst criticism of A.I.G.'s reduction in loss reserves in the third quarter of 2000," the Justice Department said in a statement accompanying the indictment.

The New York attorney general, Eliot Spitzer, is also investigating improprieties at A.I.G. and has filed a civil fraud complaint against A.I.G. and its former chief executive, Maurice R. Greenberg, as well as the former chief financial officer,Howard I. Smith.

Federal prosecutors in Manhattan are also investigating whether Mr. Greenberg may have tried to manipulate A.I.G.'s share price shortly before he stepped down from the company's helm. Mr. Greenberg has denied any wrongdoing; A.I.G. has been expected to seek a settlement with federal and state regulators.

"I've heard nothing from the government," said Frederick P. Hafetz, a lawyer representing Mr. Milton, before the indictments were announced. "If indicted, Mr. Milton will vigorously contest the charges, and I'm confident he will be vindicated at trial."...

The complaints raise questions about the potential impact on Warren E. Buffett, the billionaire investor who controls Berkshire Hathaway, which owns General Re, as well as on Mr. Greenberg. Mr. Buffett has not been charged with any wrongdoing in the investigation, and prosecutors have described him as nothing more than a cooperating witness....

The stocks of both companies dropped moderately today on the New York Stock Exchange, A.I.G. losing 80 cents, to close at $65.47, and Berkshire Hathaway losing $190, to $88,800.

In September, the Securities and Exchange Commission notified Joseph P. Brandon, General Re's current chief executive, that it planned to file a civil fraud complaint against him in connection with its wide-ranging investigation of insurance industry abuses....

The S.E.C. also filed civil charges today, but it did not cite Mr. Brandon. Instead it named the four former insurance executives facing the criminal charges plusChristopher Garand, the former head of General Re's finite reinsurance operation.

The five were charged with securities fraud in connection with what the agency called a "sham transaction." They could face financial penalties, if convicted, and could be barred from becoming an executive or director of a public company.

A.I.G. has previously acknowledged that its transactions with General Re were improper. Regulators and prosecutors have characterized the deals as an effort by A.I.G. to make its financial statements appear more robust than they actually were. A.I.G. forced Mr. Greenberg, a strong-willed and detail-oriented executive, to retire last March because of improprieties associated with the transactions.

Mr. Ferguson served as General Re's chief executive from 1987 to 2001, when Mr. Brandon succeeded him. Last spring, General Re terminated a consulting contract it had with Mr. Ferguson....

According to an e-mail message Mr. Ferguson wrote on Nov. 6, 2000, he said that he asked Mr. Buffett whether the A.I.G. transaction "passed the NYT test," in a reference to The New York Times. According to a person who has read the message and described it over the telephone to a reporter, it stated that Mr. Buffett told Mr. Ferguson that the deal passed that test, "but not by a huge margin."...

Last June, two former senior General Re executives, Richard Napier and John Houldsworth, pleaded guilty to fraud charges filed by the United States attorney's office in Alexandria, Va. Both men acknowledged helping A.I.G. manipulate its accounts...

U.S. Department of Justice Press Release

~ ~ ~

January 30, 2006

Restraining Order Granted in AIG Dispute

Forbes, AP

A state judge granted a temporary restraining order Monday preventing private insurance agencies run by American International Group Inc.'s, former CEO,Maurice "Hank" Greenberg, from trying to pry business from his old company.

The order lasts until Thursday, when both sides return to court for more arguments.

AIG, accusing the private insurance agencies of misconduct for trying to lure business from AIG, sued them last week. The agencies are subsidiaries of C.V. Starr & Co. Inc.

Greenberg controlled AIG for decades before being forced out in March 2005 during a probe of the insurer's accounting practices. He is now battling AIG over who controls Starr.

In last week's lawsuit, AIG tried to block a Starr division from selling insurance policies for other companies, including the National Indemnity Co., a division of Berkshire Hathaway Inc. On Friday, Starr filed a lawsuit accusing AIG of trying to prevent Starr's agencies from competing with AIG....

New York Attorney General Eliot Spitzer filed civil charges against Greenberg and AIG in May 2005, accusing them of improper accounting and misleading investors.

AIG, which has restated five years of earnings, is expected to pay more than$1 billion to settle civil fraud charges.

Greenberg denies wrongdoing.

~ ~ ~

December 14, 2005

Spitzer:

Insurance Exec Shorted Foundation

Forbes

New York Attorney General Eliot Spitzer on Wednesday accused embattled insurance executive Maurice R. "Hank" Greenberg of participating in a series of financial transactions 35 years ago that cost the charitable foundation of his mentor $6 billion.

Spitzer's allegations were contained in a letter delivered Wednesday to the president of the Starr Foundation. They represent the latest escalation of his battle with Greenberg, who resigned in March as the chairman and chief executive of American International Group Inc. amid widening federal and state probes of accounting irregularities at the world's largest property and casualty insurance company.

The Starr Foundation's 2003 tax return filed with the Internal Revenue Service listed assets of $3.6 billion, made up mostly of shares in AIG, and showed that it made more than $188 million in charitable donations that year. The bulk of those were grants to colleges and tuition payments made for students.

The attorney general urged the foundation to take civil action against Greenberg and suggested he would do so if they don't act by the end of January to recover the assets and reconstitute its board "to guarantee it the independence needed to advance its charitable mission into the future."

Spitzer alleged in the letter that records obtained by court order from AIG's Bermuda offices show that three transactions in 1969 and 1970 were rife with conflicts of interest that harmed the interests of the charitable foundation.

"Mr. Greenberg directed a series of transactions that deprived the Starr Foundation of billions of dollars in assets," said Spitzer spokesman Darren Dopp. "Whether that improper conduct occurred yesterday or years ago doesn't matter. There is no sunset on fiduciary obligations."...

For more, GO TO > > > The Starr Foundation

~ ~ ~

September 4, 2005

Cash payoffs, bonds and murder
linked to White House 911 finance

Documents point to attack on America
by White House crime families

by Tom Flocco, www.tomflocco.com

Sioux City, Iowa – According to leaked documents from an intelligence file obtained through a military source in the Office of Naval Intelligence (ONI), on or about September 12, 1991 non-performing and unauthorized gold-backed debt instruments were used to purchase ten-year "Brady" bonds.

The bonds in turn were illegally employed as collateral to borrow $240 billion--120 in Japanese Yen and 120 in Deutsch Marks--exchanged for U.S. currency under false pretenses; or counterfeit and unlawful conversion of collateral against which an unlimited amount of money could be created in derivatives and debt instruments.

The illegal transactions are also linked to the murder of a U.S. Army colonel charged with overseeing approximately 175 secret CIA bank accounts, according to the officer’s wife, Mrs. V. K. Durham. During multiple interviews, Durham told TomFlocco.com that Bush 41 and Clinton administration officials visited her husband Colonel Russell Hermann several times in the months prior to and three days before his torture and murder on August 29, 1994.

Durham told us the $240 billion in stolen currency was obtained resulting from George H. W. Bush’s presidential abuse of power, when he authorized former Treasury Secretary Nicholas Brady and former Secretary of State James Baker III to make fraudulent use of the Durham Family Trust collateral without her permission. There is evidence that Colonel Hermann’s and V. K. Durham’s signatures were forged on a Goldman-Sachs bank account certificationrequesting the conversions to U.S. currency.

The money was never repaid since the ten-year Brady bonds--purchased before September 13, 1991 using the fraudulent collateral and gold bullion as security came due on September 12, 2001--the day after the 9.11 attacks, having allegedly been underwritten and held by the trustee, Cantor-Fitzgerald bond brokerage firm [whose offices on floors 101-105 in the North Tower of the World Trade Center (WTC) were destroyed on 9.11 along with the Brady bond evidence].

Three days before his suspicious death, Colonel Hermann told his wife that former President George H. W. Bush, Federal Reserve Chairman Alan Greenspanand U.S. Marine Colonel Oliver North (pardoned by Bush Sr. two years earlier for his Iran contra indictments when Bush Sr. was also facing indictments for his role in Iran contra) all passed V. K. Durham coming up in an adjacent elevator after all three had left Hermann’s room and gone down in another elevator at the Veterans Administration Health Care Center in Marion, Illinois.

Hermann had been probing Bush 41 and Clinton links to narcotics money laundering, according to his wife.

Durham told us that Colonel Hermann told her "Bush, Greenspan and North were trying to get me to sign off on the CI Ltd., the Central Intelligence, Ltd.,Iran and Latin American contra accounts. They held about $13-17 billion in physical gold."

This, raising questions about an evidence trail for a grand jury to seek restoration of funds potentially stolen by high government officials from United States taxpayers....

~ ~ ~

Misused collateral = gold security = bogus bonds =
$240 billion stolen currency

Evidence indicates that on August 19, 1991, John D’ Aquisto of DFG Inc. mailed (1A) Federal Express packages to United States Federal Reserve Bank Chairman Alan Greenspan and Bush 41 Secretary of the Treasury Nicholas Brady to communicate details of currency exchange transactions which ultimately led to multiple allegations of bank fraud involving billions of dollars, according to V. K. Durham. It is not known whether this cash was laundered into the Philippines and then used for the "family," referred to in the Wanta-Cheney memo.

The FedEx receipts show contact between Greenspan, Brady and John D’ Aquisto and given the bank fraud links, Greenspan’s visit to Russell Hermann and the close proximity of the transactions to September 11, Durham says prosecutors should interrogate the three about their knowledge of improper banking activities which could be linked to the North Tower attacks at Cantor-Fitzgerald and the Pentagon impact reportedly involving the ONI on September 11--witnesses for a grand jury, should an official entity decide to prosecute mass murder on behalf of U.S. taxpayers....

According to Stewart Webb, Nevada Secretary of State Frankie Sue Del Papa, a Bush shadow government player, participated as a co-conspirator to obstruct justice, intentionally switching forged documents pertaining to registrations and filings of corporations involving Bush 41 and Leonard Millman. One of the corporations connected to the gold-backed Brady bonds above was Cosmos Corporation of Nevada--one of several Cosmos corporations.

Robert D. Hammond, Vice President of the Securities Sales Department, Goldman Sachs & Co., wrote to John D’ Aquisto and DFG, Inc. on August 7, 1991, certifying that DFG had an account with Goldman, number 027-02082-2; however, the letter’s notary seal contained the forged signatures of both V. K. Durham and her husband, Colonel Russell Hermann. [ Durham initialed and attested to the alleged bank fraud directly on the notarized document, indicating the signatures Goldman sent to D’ Aquisto were forgeries]:

"Please be advised that if DFG wishes to engage in foreign currency transactions, Goldman Sachs has extensive capabilities in this area. For instance, upon receipt of approximately 700 million Japanese yen into the above account, Goldman could convert such funds into approximately $5 million U.S. dollars."

D’ Aquisto also complained about more alleged bank fraud by Goldman Sachs in a letter to Phil Roberts in the Bank Fraud Division at the U. S. Department of the Treasury, written on September 10, 1991, regarding suspect banking procedures wherein "funds were reversed and withdrawn from our account without our permission."

In another letter on September 10, 1991 to Karl Ehm, D' Aquisto and Russell Hermann asked "did you receive the return of $5,117,280.00 back from Goldman-Sachs?" The letter also indicated "no zero balance shown after the activity summary," providing no evidence that $5+ million was withdrawn just minutes after it was deposited while showing that the money was still in the account.

The letter specifically referred to a partial Japanese Yen transfer which took place at Goldman’s Los Angeles office prior to the September 13, 1991 ten-year contract. The transaction in California provides potential U.S. jurisdiction and venue for another citizen grand jury should obstruction of justice continue in New York City where Spitzer and Morgenthau refuse to probe the suspect $240 billion dollar financial transaction which came due at Cantor-Fitzgerald two days after the 9.11 attacks:

"On September 10, 1991 we received our August 1st-August 31 statement from Goldman...On the statement enclosed you will see that the Japanese Yen went to Mitsui Bank of Tokyo, which is Goldman Sachs’ correspondent bank. The monies were then credited to the account and exchanged and deposited, U.S.D. equivalent at the rate of exchange. That part of the transaction was perfectly normal."

"What happened next is what concerns me. On August 7, 1991, the funds were reversed and withdrawn from our account without our permission! There is no reference to the whereabouts, or disclosure of the whereabouts of this money, or of the receipt of acknowledgement that this transaction even took place."

"As an ex-banker of 16 years, I feel that my rights have been violated to the highest degree, and the laws of the United States have been broken. I think you would call this bank fraud? According to Goldman Sachs, this was probably a clerical error on their part. I find it hard to believe that a company such as Goldman Sachs would be so negligent as to make a $5,117,280.00 "clerical error....you can call me at our other company Ariel Life Systems Inc., a government contracted corporation with the National Aeronautics and Space Administration (NASA)."...

According to two witnesses, Greenberg-Traurig is allegedly tied to suspect legal entanglements surrounding the challenge for control of New Hampshire 9.11 widow Ellen Mariani's estate and her husband Neil’s death on September 11. Mariani’s litigation in New York and New Hampshire against President Bush and other top officials seeking court-ordered discovery about White House involvement in the attacks and obstruction of justice by members of Congress was blocked due to complications surrounding the challenge for control of her husband’s estate.

Norman Brownstein was a former Director and the current corporate attorney for the late Leonard Millman’s MDC Holdings, Inc., the parent company of Silverado Savings and Loan Association where President George W. Bush’s brother Neil was a Director of the failed institution which cost American taxpayers at least $50 billion dollars.

Webb revealed he has evidence that proves Silverado laundered $12 trillion dollars in narcotics money during the time period that President Bush’s brother Neil was on the board of directors of the failed bank organization.

According to Leonard Millman’s ex-son-in-law Stewart Webb, $2.6 billion in Mena, Arkansas/Iran contra drug money was laundered through the Rose Law firm [where New York Senator Hillary Clinton was a partner] into Millman’s failed M&L Business Machines Company of Denver.

Webb alleged that his documented evidence and first-hand witnesses prove that Hank Greenberg, Leonard Millman and Meyer Blinder were all involved in massive securities fraud involving National Brokerage Group of Companies, and its Stinger Securities, Coral Gables Securities and others that allegedly milked American investors for billions of dollars during the 1980s. This, while Webb also alleged that Hank Greenberg was involved in re-insurance fraud loans with Millman’s National Acceptance Company which owned First National Acceptance Company, both of which own Bank of America, with the first two being financially connected to AIG.

Attorney General Spitzer is in possession of part of the above evidence relating to Leonard Millman’s links to $6 trillion in American pension fund fraud; moreover, Webb told us that former Independent Counsel Kenneth Starr--who the whistleblower said obstructed justice in his investigation of Clinton/Bush-linked narcotics money laundering--had lunch with Mr. Spitzer a few weeks ago, raising additional questions regarding obstruction of justice for a grand jury with subpoena power.

Webb alleges that drug money was laundered by Millman into Hank Greenberg’s AIG and other Wall Street accounts by Gwendolyn Waymark of the Waymark Group and also the Foundations Group--which the Cheney memo above links to boxes of cash moved from the Philippines and tied to both the recently deceased Millman and George H. W. Bush.

The Foundations Group’s laundered drug money paid for a group of 9.11 terrorists secretly headed by the Defense Intelligence Agency’s (DIA) Gary Best--one of the former Iran contra shadow government players--according to Webb.

Most shockingly, Webb alleges that "ONI-CIA Marine officer Oliver North,CIA-DIA agent Gary Best, CIA agent Terry Lynn Nichols and CIA contract agent Timothy McVeigh were all paid through Waymark’s Foundations Group funding arm--directly or indirectly."

This raises the bar as to why the Vice President has not been subpoenaed when the Wanta memo directly links Cheney, Dr. Rice (and by authority and the obligation to act upon a financial terrorist threat– President Bush) to knowledge of the Foundations Group in what appears to be United States covert black operations involving financial terrorism and mass murder.

Webb told us, "this explosive evidence is why Eliot Spitzer and Robert Morgenthau are obstructing justice to let AIG off the 9.11 hook in the "public" part of their current and high-profile Wall Street probe. But it’s also why the Joint Congressional Intelligence Committee members are obstructing justice and committing treason by refusing to subpoena Cheney and other key intelligence officials regarding their awareness of a "family" extending from the Philippines to Europe and the United States--all with links to financing terrorism."

A comprehensive grand jury investigation, with subpoenas, testimony and interrogation by independent, a-political career prosecutors like Patrick Fitzgerald could well blow the lid off 30+ years of illegal operations, financial terrorism, 9.11 mass murder, the Oklahoma City bombing, the Kennedy assassination and pre-emptive war based upon lies--a lengthy pattern of illegal activities by a succession of White House crime families, according to both Webb and V. K. Durham.

All this, tacitly endorsed by quietly complicit congressmen--either too frightened to speak truth to power due to past small-plane assassinations or having been self-absorbed by pensions, perks and power to exercise their constitutional mandate to protect the very citizenry which honors them with high office.

~ ~ ~

CIA banker’s strange death

Colonel Russell Hermann--a 53-year career military officer, had been conducting a two-year internal investigation of President Clinton, White House counsel Vincent Foster and protracted drug shipments into Mena, Arkansas; but Central Intelligence would not let him retire since it was too expensive to train new personnel and re-start the investigative trail, according to his wife "V.K." who witnessed the first attempt on her husband’s life from her front porch in 1993.

Durham told us "he traveled in a big black truck with tons of surveillance equipment. I saw it, but he didn’t want me to come near it. He said ‘you don’t want to know about this;‘ and as he put his arms around me and kissed the back of my neck, he said ’we caught President [Clinton’s] man [Vince Foster] with Swiss bank accounts, so now I can file my investigation reports, retire, and we can start living a new life.’ "

"This was July 1, 1993. Vince Foster turned up dead on July 20 and my husband Russell was murdered on August 29, 1994," she said.

"The next day, while mowing his lawn on July 2, 1993, Russell was sprayed with some type of poison gas--possibly sarin--from a passing vehicle. He took a few steps and went down, bleeding from the eyes, ears and nose," said Durham who had married Hermann six years earlier on November 27, 1987.

"Russell had not finished his report on Clinton, Foster and the Mena, Arkansas drug money laundering, she said, adding that her husband had cryptically told her, "If I go to the hospital without that report being finished, I am a dead man." This, reminiscent of Michael Corleone’s "men are coming to kill my father" plea to a lone nurse caring for the Godfather in an empty wing of a New York City hospital.

"There was no sign of an ambulance," said Durham, "a 24 foot white box van with no lettering or markings took Colonel Herman away and he was missing and unaccounted for from 9:00 am till 10:00 pm at night. I found him the next day through a phone call at my neighbors."

"He was at St. Mary’s Hospital in Clayton, Missouri--in a wing all by himself, strapped down to a bed with no life support system when I got to him, nothing," she said, adding "Russell was a U.S. intelligence officer--a full Colonel--and he told me to ‘call my CWO2 [Chief Warrant Officer] and tell him to get my mandatory two men in here to protect my life."

Offering a warning to current CIA officers, Durham said "Russell told me they strung him up on meat hooks on the way to the hospital--I saw the [warning: graphic photos] hook marks under his collar bone: they beat him and burnt him with cigarettes, broke his ribs, left hand and left arm, and shoved a cattle prod into his rectum," said the furious widow, making a clear point: "they’ll do it again to any of the intelligence guys walking around now if they don’t do something to stop these criminals."

St. Mary’s hospital was described to us as some sort of secret military asylum--a hospital of horrors, by Durham, who said "the hospital was filled with naval officers and a woman named Ruth said ‘you have to sign these papers (4-inch stack),’ and I asked ‘where are my husband’s records;’ she pulled them back and shredded them right in front of me--all his military records--a full-bird U.S. Army Colonel."

"When Ruth had her back to me, another woman slipped me a piece of paper of the hours and medical log sheets with the hour Russell was taken to the hospital--helping to fix the hours of his torture and the fact that his ambulance authorization had not even been signed," she said, "proving he was tortured in the back of that white truck--and this is the United Stated Veterans Administration!"

"Russell was kept there against his will after he recovered until November 17, 1993. One of the doctors, another friend of Russell’s and I saw Marine Colonel Oliver North dressed in a white medical coat attempting to disguise himself while visiting Russell’s hospital room on November 13 or 15, just before he was released from the hospital.

Durham told us, "something was going on at that hospital. I saw a Navy Commander strapped to a gurney--from Seal Beach...tied down. A female doctor was sitting there with his wife and they were bartering over his body parts. I heard all this with Russell’s doctor friend. The Commander was alive and strapped there, his eyes looked terrified and his mouth was taped shut," she said, offering "his wife walked over to her husband and said ‘Now I’ll never have to know when you’re coming home again.’ We inquired about him later and found that he had come up ‘missing.’ "

Still weak and declining from the first murder attempt on his front lawn, Colonel Russell Hermann ended up at the Veterans Administration Health Care Center in Marion, Illinois; and Durham told us "Hillary Clinton’s operatives, David Horowitz and Karen Koffee came to meet with Russell, seeking money to underwrite the National Healthcare Program she was pushing in 1994."

"This was on July 20. Russell told me Clinton’s people said ‘you’re going to die before very long and your wife will disappear and no one will know where she is,’ and both of them are accessories to murder as far as I am concerned," said Durham, as we listened in stunned silence.

"Russell was doing pretty well around August, 1994, and on Friday, August 26, he said that George Bush Sr., Alan Greenspan and Oliver North came to see him in his hospital room at the VA, and tried to get him to sign off on the Iran and Latin America contra accounts so they could get control of them," Durham told us, adding, "but Russell told me he just reached down and grabbed a hand-full of excrement from his hospital bowel and threw it at President Bush, saying ‘go to hell.’ Then the three of them left the room as I was coming up the other elevator."

"I was planning to take Russell home from the VA the following Monday, August 29--a couple days after Bush, Greenspan and North visited on Friday. I came in to pick him up and he was dead," she said, adding "the attending physician, Dr. Pettit ,refused to do an autopsy, even though Russell’s body was all red and he was given 8 or 9 injections on his hip and the base of his skull, and his back and body were as red as fire--but his eyes were as clear as mine."

"The coroner, Michael Vickery, took a number of photographs and told me ‘this man was murdered,’ and I had been refused possession of his body for six days--from August 29 until September 5--after being told there was evidence that he was frozen alive, she told us while still in stunned silence.

When we asked what happen next, Durham said "I found out the contra accounts were moved from Republic Bank in Texas to Republic Bank in New York; I think Teddy Lloyd was the banker in New York. I believe they knocked Russell out and I thought he was dead. Then they moved him to the Guernsey Islands near England and used his voice-activated and fingerprint codes to sign over control of the $13-17 billion in gold that was in the accounts," providing another paper trail for recovery of missing funds from the U.S. Treasury--but also a public view into the inner-working of intelligence bank account security.

V. K. Durham told us one of Russell’s men contacted her and said there had been a government contract to take out the Colonel by either a Commander McDonough or MacDonald, and that there are transcripts from the tape of his torture and death, but she does not know where they are....

Norman Philip Brownstein, a current Director of Denver’s Chubb Insurance Company, allegedly owned by George H. W. Bush and Webb’s ex father-in-law, the late Leonard Millman – through illegal trusts funded by laundered drug money controlled by Brownstein – paid President Clinton’s legal fees and also paid off Paula Jones in her sexual harassment suit against the President. Clinton’s personal attorney, James M. Lyons--engulfed in the Whitewater scandal--sits on the board of Millman’s MDC holdings.

All this, according to Webb’s documents and first-hand witnesses, but also Webb's grand jury demand--filed three times.

Webb told us as recently as August, 2004 in U.S. Federal Court in Denver [Case No. 95-Y-107], Chief Judge Richard Matsch has continued to ignore and obstruct his explosive evidence in a manner similar to when Matsch ruled in the Oklahoma City bombing case.

Lastly, another illegal operation employed to "control" and pay off House and Senate members was through Apartment Investment and Management Company(AIMCO)--a real estate investment trust (REIT) currently run by former Congressman Terry Considine and Bush 41 attorney Norman Brownstein.

Members of Congress have been bribed via the Department of Housing and Urban Development (HUD) via Millman and Brownstein’s handing over hidden corporate ownerships in AIMCO’s stolen HUD properties, the federal whistleblower has alleged.

According to Webb, AIMCO is the largest landlord of U.S. apartments--with units that were stolen by Millman’s partner Phil Winn of Denver’s Winn Group, the focus of the 1989 congressional "HUD Scandal " investigation which led to Independent Prosecutor Arlen Adams convicting Switzerland Ambassador Phil Winn and others--but three months before leaving office, President Clinton pardoned Winn. And congressmen continue to profit from money stolen from the taxpayers.

All this, as the voices of thousands of American boys cry out from their graves on the bluffs above the Normandy beaches on the English Channel: "France!...now it’s your turn to help America."

Who will guard the guards?

Mary Schneider contributed additional research for this report.

[Mary was illegally fired by the Department of Homeland Security for her whistleblower activity in the Orlando, FL Immigration office to protect America. Rep. Ric Keller (R-8-FL) and Sen. Bill Nelson (R-FL) refused to help Mary even after I flew to Florida and met personally with them....]

www.tomflocco.com/fs/FinancialTerrorism.htm

~ ~ ~

July 1, 2005

Target: AIG

Fraud probe of Maurice "Hank" Greenberg intensifies

By Larry Chin

In an April television interview, New York Attorney General Eliot Spitzer declared that his office had "powerful evidence" that AIG was "a black box run with an iron fist by a CEO who did not tell the public the truth". In May, Spitzer filed civil fraud charges against Greenberg, in a probe that has ensnared another Wall Street god, Berkshire Hathaway's Warren Buffett. Buffett cooperated with the investigation as a witness (not a target). On June 9, 2005, two executives at General Re (a Berkshire Hathaway unit) pleaded guilty to conspiring to file false financial information. Spitzer is also pursuing Hank Greenberg's son, Jeffrey, in a separate investigation of bid-rigging at Marsh & McLennan (a top Bush campaign contributor). Jeffrey Greenberg quit as Marsh & McLennan's CEO in October 2004.

Super-elite Hank Greenberg - a legendary member of world planning groups (Council on Foreign Relations, the Bilderberger Group, the Trilateral Commission) and the Heritage Foundation, a former candidate for CIA director (1995), Bush family crony, and high-level functionary for all US presidents stretching back to Kennedy - remains supremely confident, and defiant. His net worth is still at least $3 billion. Greenberg has transferred hundreds of shares of stock to his wife and Greenberg family trusts. Greenberg is being defended by the high-powered attorney David Boies (of Bush v. Gore fame).

Where the real bodies are hidden
Although Greenberg resigned as CEO and chairman of the AIG board, Greenberg still manages Starr International (SICO) and C.V. Starr. SICO and C.V. Starr (which was already under fire for millions in diverted commissions and questionable executive pay) are AIG private holding companies that control billions in AIG stock. More importantly, the Starr companies constitute the conglomerate's original roots as an intelligence-related proprietary founded by OSS agent Cornelius Vander Starr.

In other words, Greenberg remains in charge of the (real) "baby."

Building on Scott's research, Michael C. Ruppert's investigation "AIG" (From The Wilderness, August 14, 2001) exhaustively deconstructed Greenberg and AIG, exposing continuing connections to covert operations, narcotrafficking, money laundering, and AIG's central role in the Wall Street/Washington power nexus. In addition to explaining how "insurance" is used in intelligence operations, Ruppert tracked down then-AIG employee Coral Talavera, the wife of Medellin Cartel co-founder Carlos Lehder. The questions raised by Ruppert regarding AIG's connection to Lehder and millions in drug money (laundered between 1987-1992) remain unanswered, and the dark realities about the conglomerate, studiously ignored.

TIME magazine's June 20, 2005 profile of the irascible Greenberg, "Down But Not Out" is written like a tribute (evidenced by the title). Still, even this breezy piece confirms how Greenberg has functioned as a career agent and strongman, deeply involved in America's most important Eastern operations for decades, for anyone with a grasp of history:

Greenberg, a "private citizen" was involved in sensitive high-level negotiations with (and occasional bullying of) Asian leaders, from the Philippines' Ferdinand Marcos to China's Zhu Rhongji.

Will any probe follow the trail from the Wall Street business-as-usual swindles, into the heart of an American empire that sustains itself on destruction?

In "Enron: Ultimate Agent of the American Empire", this writer penned the following:

AIG and Greenberg are equally powerful examples of this same milieu.

~ ~ ~

June 6, 2005

SEC CHARGES GEN RE EXECUTIVE FOR AIDING IN AIG SECURITIES FRAUD

Washington, D.C. - The Securities and Exchange Commission today announced that it filed an enforcement action against John Houldsworth, a former senior executive of General Re Corporation, for his role in aiding and abetting American International Group, Inc. in committing securities fraud.

In its complaint filed today in federal court in Manhattan, the Commission alleged that Houldsworth and others helped AIG structure two sham reinsurance transactions that had as their only purpose to allow AIG to 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 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.

In partial settlement of the Commission's claims, without admitting or denying the SEC's allegations, Houldsworth consented to the entry of a partial final judgment which resolves all issues of liability against him but defers the determination of disgorgement and penalties until a later date. As part of his settlement, Houldsworth has agreed to cooperate fully with the Commission in its continuing investigation of this matter.

Linda Chatman Thomsen, Director of the Commission's Division of Enforcement, said: "AIG's fraud did not occur in isolation. With this case, we are holding accountable an individual who, even though outside AIG, knowingly assisted the company to manipulate its financial results."

Mark K. Schonfeld, Director of the Commission's Northeast Regional Office, said: "This is another step in our ongoing investigation of the abuse of insurance and reinsurance to falsify a company's financial results. Here the defendant helped to structure a sham transaction designed solely to enable AIG to achieve a specific, and false, accounting result."

AIG's Fraud

In its complaint against Houldsworth, the Commission alleges that Houldsworth and others at Gen Re worked with their counterparts at AIG to fashion two sham reinsurance contracts between Cologne Re Dublin, a Gen Re subsidiary in Dublin, Ireland, of which Houldsworth was the Chief Executive Officer, and an AIG subsidiary.

The complaint details the conversations of participants in the planning meeting and other conversations that led to AIG's filing of fraudulent financial statements. On the basis of these conversations and other facts alleged, the complaint charges that all parties understood from the beginning that they were engaged in an undertaking to create sham transaction documents for the sole purpose of allowing AIG to make false accounting entries on its books.

As Houldsworth and others at Gen Re knew, AIG accounted for the sham transactions as if they were real reinsurance contracts that transferred risk from Gen Re to AIG, when all parties involved knew that was not true.

As a result of AIG's accounting treatment for these transactions, the company's financial results showed false increases in reserves that AIG touted in the company's quarterly earnings releases for the fourth quarter of 2000 and the first quarter of 2001. Without the phony loss reserves, AIG's financial results in both quarters would have shown further declines in its loss reserves.

In a press release dated March 30, 2005, AIG admitted that the accounting for these transactions was improper and would be corrected. In its 2004 Form 10-K filed with the Commission on May 31, 2005, AIG restated its financial statements to recharacterize the transactions as deposits rather than as reinsurance.

The Commission's complaint charges Houldsworth with aiding and abetting the violations by AIG and others of Sections 10(b), 13(a), 13(b)(2) and 13(b)(5) and Rules 10b-5, 12b-20, 13a-1, 13a-13 and 13b2-1 of the Securities Exchange Act of 1934.

Houldsworth, in addition to undertaking to cooperate fully with the Commission, consented to the entry of a partial final judgment permanently enjoining him from future violations of these provisions, barring him from serving as an officer or director of a public company and deferring the determination of civil penalties and disgorgement to a later date.

In addition, Houldsworth has agreed to a Commission administrative order, based on the injunction, barring him from appearing or practicing before the Commission as an accountant, under Rule 102(e) of the Commission's Rules of Practice. Houldsworth is licensed as a Chartered Accountant in England.

The Commission's investigation is continuing. The Commission acknowledges the assistance and cooperation by the U.S. Department of Justice Criminal Fraud Division and the U.S. Postal Inspection Service in this matter.

Contacts:

Mark K. Schonfeld (212) 336-1020

Director, Northeast Regional Office

Andrew M. Calamari (212) 336-0042

Associate Director, Northeast Regional Office

http://www.sec.gov/news/press/2005-85.htm

May 27, 2005

AIG Accountant PWC Alleged
to Have Disregarded Warnings

The long-time accounting firm for American International Group, PricewaterhouseCoopers LLP, reportedly ignored warnings from the audit committee for the AIG board of directors when that panel said in 2001 and 2002 that it could not vouch for the insurer's accounting and internal financial controls, according to a story in the Washington Post.

The audit committee, whose responsibility is to oversee the work of the outside accounting firm PWC, reported in AIG's annual corporate filings for those years that it could not independently confirm that AIG management "maintained appropriate accounting and financial reporting principles."

According to the Washington Post, the committee also commented that it could not assure that PWC was truly acting in an independent role.

The story notes that it is not entirely unusual for audit committees to include language which casts doubt on the independence of the accounting firm, but it also quotes accounting experts that the language used by the AIG audit committee was unusually strong.

A spokesman for PWC told the Post that similar language has been used by other large companies and would not have been seen as a "red flag" by auditors.

The audit committee's caution has been cited in a lawsuit brought by the attorney general of Ohio against AIG accusing the insurer of securities fraud and PWC of issuing "false and misleading" financial reports on AIG.

www.insurancejournal.com/news/national/2005/05/27/55505.htm

~ ~ ~

May 22, 2005

Grand Jury Investigating AIG

Forbes

A grand jury is probing potentially criminal conduct by individuals at insurer giant American International Group Inc., including former top management.

This week, attorneys from New York Attorney General Eliot Spitzer’s office began offering evidence to the jury that could result in criminal indictment of one or more individuals, The Wall Street Journal reported on its Web site late Friday....

AIG senior executive Joseph Umansky has testified before the grand jury, the Wall Street Journal reported. AIG’s former longtime CEO and chairman, Maurice R. “Hank” Greenberg and former Chief Financial Officer Howard I. Smith are expected to be the focal point of the grand jury investigation.

The SEC, the New York attorney general’s office, the New York Insurance Department and the Justice Department have been examining Greenberg’s role in initiating a transaction with General Re, a reinsurance subsidiary of Berkshire Hathaway Inc., that allowed AIG to inflate reserves against future claims - an important measure of an insurer’s strength.

AIG said in late March that it did not account correctly for that transaction and others....

www.forbes.com/feeds/ap/2005/05/20/ap2045571.html

~ ~ ~

May 6, 2005

Greenberg Reported Target
of Stock Inquiry

Insurance Journal

The former CEO of American International Group Inc. is once again making headlines.

According to the New York Times, federal prosecutors are looking into whether Maurice Greenberg reportedly was in charge of an effort to manipulate the stock price of AIG in his last weeks as CEO.

Citing unidentified people officially briefed on the inquiry, the newspaper reported an executive with the company’s trading group informed the company late last week that he had chatted with Greenberg about AIG’s stock price in February, when it had started to quickly decline. People who heard a recording of the conversations report Greenberg is said to be instructing the trader to buy shares of AIG, according to the newspaper said. Such purchases could violate federal securities law.

The conversations between the trader and Greenberg were caught on a recording system used by the trading division, according to the sources. The recordings were listened to by the company and its lawyers, and then sent to prosecutors with the U.S. attorney’s office in Manhattan and the Securities and Exchange Commission.

Federal prosecutors have subpoenaed all of AIG’s recordings from its trading group, which reportedly go back as long as two years ago, according to the sources.

http://www.insurancejournal.com/news/east/2005/05/06/54786.htm

~ ~ ~

May 5, 2005

FBI Targets Insurance Industry in
Widening Fraud Probe

Insurance Journal

The insurance industry, already under scrutiny by state and federal authorities for various practices, now faces another questioner.

The Federal Bureau of Investigation has launched a probe of the insurance industry that targets some of the accounting mistakes found at American International Group to see how widespread the problems might be.

The FBI review is not confined to insurer accounting but is also looking into agents and brokers who may be diverting premiums for their own use and into the operations of workers’ compensation plans sold by professional employer organizations (PEO).

The FBI said its agents are talking to industry executives and regulators as well as looking for patterns in existing complaints and civil records.

“We do not want to be caught napping on this,” Chris Swecker, an assistant director at the FBI who oversees the financial crimes unit, told The New York Times. “We are taking a very, very hard look at this to see if it represents a pervasive problem.”

The FBI said it would conduct traditional investigations as well as “utilize sophisticated techniques, to include covert undercover investigations, to apprehend the fraudsters.”...

“Insurance fraud continues to maintain a top investigative priority due in large part to the insurance industry’s significant status as one of the largest U.S. industries (more than doubling the Gross Domestic Product contributions of the securities industry),” said the report, which points out that the insurance industry consists of more than 7,000 companies with over $1 trillion in premiums each year.

Among the FBI’s concerns is that the “insurance industry is in the midst of technological and regulatory changes which will result in foreign insurance entities playing a larger role.” The report maintains that regulation of the industry is becoming more difficult as more foreign players enter the market.

The FBI said it is working with the National Association of Insurance Commissioners to identify “the top echelon fraudsters defrauding the insurance industry and most prevalent schemes within the insurance industry.”...

The Times said that the FBI official suggested this could be “the next big one,” apparently referring to the 1980's savings and loan crisis and the more recent headlining corporate fraud cases at Enron and other big firms.”...

The FBI has also recently joined the International Association of Insurance Fraud Agencies, an international non-profit organization which addresses insurance and insurance-related financial crimes on a global basis.

www.insurancejournal.com/news/national/2005/05/05/54728.htm

~ ~ ~

(A Catbird Note: If any of you insurance industry insiders would like to assist the FBI in their investigations, you can GO TO > www.fbi.gov)

~ ~ ~

April 26, 2005

Shady Business At AIG

By Bernard Condon, Forbes

The American International Group board was advised by outside counsel as far back as 1992 that the workers’ compensation practices now under scrutiny were illegal, according to a person familiar with the matter.

The New York Attorney General Eliot Spitzer announced earlier today that a recently uncovered “internal memo” earlier that year stated that a company practice of under-reporting workers’ compensation premiums to cut its mandated contributions to state funds was illegal.

That document was written by a “former senior executive,” say two people briefed on the document. One of those sources tells Forbes.com that the board then asked for a second opinion from Sullivan & Cromwell, and that the law firm reported back “a few months later” criticizing the ex-employee’s memo as somewhat dramatic but supporting its conclusion....

The practice involved booking workers’ comp premiums as general liability ones. Than enabled the company to avoid paying its “true share” into various state funds, according to Spitzer’s office. Spitzer says the internal document from 1992 estimated “unlawful benefits” at “tens of millions” of dollars annually.

Spitzer’s office and the New York Insurance Department say they plan to hire a consultant to audit AIG’s workers’ compensation policies over more than a decade....

AIG is under investigation by regulators for reinsurance deals that act more like loans, and have helped artificially boost the giant company’s reserves. The company has admitted that it secretly controlled offshore companies that now need to be consolidated on its financial statements.

The company last month said it will need to restate its shareholders’ equity by as much as $1.8 billion, or 2% of the total.

~ ~ ~

April 20, 2005

Insurance Cos. Eyed By Global Watchdogs

Forbes

The United States promoted the formation of the Financial Action Task Force during the 1989 G-7 Summit, motivated by the global range of the money-laundering problem and the competitive disadvantage its own anti-money-laundering regime imposed on its financial sector.

The FATF has helped develop a coordinated international response to money-laundering, which is defined as taking illicit proceeds and moving them into the legitimate economy. The FATF initially put forth 40 recommendations intended to help national governments implement effective anti-money-laundering regimes; these were first revised in 1996 and then further updated in 2003....

The FATF promotes policies at the national and international levels to combat money-laundering and terrorist-financing....

In October 2001 the FATF expanded its remit beyond its original mandate of traditional money-laundering to cover terrorist finance, which has been describes as “reverse money-laundering,” in that it takes legitimate sources of funds and turns them toward illicit ends....

The FATF currently consists of 33 full member, including 31 countries and territories, and two regional organisations. Members are mainly drawn from advanced countries but also include the European Commission and the Gulf Cooperation Council (GCC) - Dahrain, Kuwait, Omar, Qatar, Saudi Arabia and United Arab Emirates....

The FATF has become increasingly concerned that some money-laundering activities are migrating from banks to other parts of the formal financial sector. Therefore, the FATF is currently working on a report, scheduled to appear in June, which analyzes the role of the insurance sector in money-laundering. This exercise could lead to additional recommendations concerning the “best practices” to discourage money-laundering within this sector.

However, any additional scrutiny of problematic practices in the insurance sector comes at a difficult time as, in the United States, insurance firms such as Marsh & McLennan (nyse: MMC), Ace (nyse: ACE), AIG (nyse: AIG) and Berkshire Hathaway’s (nyse: BRKA) General RE unit are facing significant scrutiny by various state and federal regulators for various transgressions, including fraud, bid-rigging and improper transactions....

The FATF remains the principal international policy-making body dedicated to coordinating efforts to counter money-laundering and shut down terrorist finance. ... Later this year, the FATF will probable extend its sectoral reach by making new recommendations covering the insurance sector....

www.forbes.com/2005/04/20/cz_0420oxan_financeaction.html

~ ~ ~

April 18, 2005

AIG Accountant on Leave

By Matthew Goldstein, The Street

The former comptroller for American International Group (AIG:NYSE) , who was promoted earlier this year to senior vice president, has taken a leave of absence from the giant insurer, which is embroiled in a far-reaching accounting scandal.

A person answering the phone for Michael Castelli said the 16-year AIG executive was "on leave."...

An AIG spokesman said he could not immediately comment on Castelli's status.

However, a source said Castelli was seen Friday being escorted out of AIG's corporate offices in Lower Manhattan by several security guards.

From 2000 through December 2004, Castelli was AIG's comptroller and chief accounting officer. He had reported to former AIG Chief Financial OfficerHoward Smith, who was fired by AIG's board on March 22 for refusing to cooperate with the joint state and federal investigation.

The board ousted Smith after he asserted his constitutional right against self-incrimination during an interview with investigators looking into allegations that AIG used accounting games and offshore reinsurers it secretly controlled to dress up its corporate books.

The investigation of AIG has led to the dismissal of a number of other executives, including the forced resignation of Maurice Greenberg, the insurance executive who ruled AIG with an iron fist for nearly four decades.

Before joining AIG, Castelli was in the insurance industry practice at PricewaterhouseCoopers. The big accounting firm is AIG's auditor...

www.thestreet.com/markets/matthewgoldstein/10218147.html

~ ~ ~

April 12, 2005

Groups to Consider
Suing AIG for $400M

Forbes

Leaders of the nation’s largest public retirement systems said Tuesday they will ask their boards to approve suing troubled insurance giant American International Group, Inc. to recover $400 million in losses suffered since the company’s problems surfaced in February.

Treasurer Phil Angelides, a board member of the $182.9 billion California Public Employees Retirement System and $125 billion California State Teachers Retirement System, said “allegations of scandal and misconduct” at AIG have caused “grievous damage” to holdings of more than 2 million California retirees and employees.

“The losses are beyond the realm of excessive,” said CalPERS President Rob Feckner, who said he will ask the full CalPERS board on April 20 to begin legal action against AIG, its executives and auditors. CalSTRS will consider the request in its May 4-5 meeting....

California’s funds hold more than $1 billion worth of AIG stock - 20.9 million shares. The shares rose $1.10 or 2.1 percent, to close Tuesday at $53.20 on the New York Stock Exchange, near the low end of a 52-week range of $50.15 to $77.36....

California’s losses on AIG stock - $240 million at CalPERS and $160 million at CalSTRS - come three years after the two funds lost $1 billion from the 2001 collapse of energy giant Enron Corp. and telecommunications giant WorldCom Inc. in 2002.

“Four hundred million in losses means a direct hit to the taxpayers of California,” said Angelides, a Democrat and announced candidate for governor next year.

“That’s money that’s not in our pension fund to meet retirement obligations of teachers, police officers and firefighters.”

Federal authorities are probing reinsurance transactions booked by AIG, the world’s largest insurer. Investigators say the company bought reinsurance from General Reinsurance Corp. in the fourth quarter of 2000 and first quarter of 2001, but allege AIG used the deal to pump up its reserves when markets were uneasy about the company’s outstanding liabilities.

The probe forced the resignation last month of chief executive officer Maurice “Hank” Greenberg, 79.

~ ~ ~

April 12, 2005

Greenberg Takes 5^th Amendment in AIG Case

Forbes

Maurice “Hank” Greenberg, the former chief executive of American International Group Inc., declined on Tuesday to answer questions posed by government investigators probing transactions at the insurance company he once headed.

The morning deposition lasted about 45 minutes, according to a person who attended the meeting but asked not to be identified by name. The person said Greenberg invoked his Fifth Amendment rights against self-incrimination in response to all questions....

Greenberg, 79, was forced to resign as CEO of AIG in mid-March and, as the probe widened, relinquished his title as chairman.

Before Tuesday’s session began, Joseph Fritsch, director of insurance accounting policy in the New York state insurance department, told reporters that investigators “have 40 pages of questions” for Greenberg.

He said that other AIG executives would likely be called for questioning, and that new information from them could result in a fresh subpoena for Greenberg....

~ ~ ~

April 13, 2005

Did Greenberg Transfer $2.2 Billion Of Shares
To Wife To Shield Assets?

By Chris Noon, Forbes

“You Can’t Touch This”, sang MC Hammer....

A similar sentiment could be on Maurice R. “Hank” Greenberg’s mind: Yesterday it transpired that the former AIG chief shifted over $2 billion worth of his company shares into his wife’s name just days before directors pushed for his resignation.

Greenberg disclosed the transfer after invoking his Fifth Amendment rights against self-incrimination in response to all questions from U.S. state and federal regulators who are probing questionable transactions by AIG. There has been speculation that Greenberg may have been attempting to guard his wealth from lawsuits that might stem from the investigation by New York Attorney General Eliot Spitzer and the Securities and Exchange Commission.

Greenberg transferred 41.4 million shares - worth $2.2 billion at yesterday’s closing price of $53.20 - to his wife Corinne P. Greenberg, three days before resigning as president and chief executive of AIG.

At the same time Greenberg denied “any pecuniary interest” in another 23.65 million AIG shares held through C.V. Starr, a unit that controls AIG managers’ compensation....

~ ~ ~

April 11, 2005

Tough Questions For AIG’s Auditors

Regulators are probing if PwC let the
financial shenanigans slip through

By Joseph Weber, Mike McNamee, Marcia Vickers & Diane Brady
Business Week

Where were the auditors? Now that American International Group Inc. has admitted to a clutch of accounting improprieties and is mulling whether to restate its past results, an all-too-familiar question is emerging: Why didn’t the auditor catch what was going on?

Were misdoings hidden from AIG’s longtime auditing firm PricewaterhouseCoopers, or did the firm turn a blind eye to problems it should have seen? Indeed, some of the searing heat that has so far felled AIG Chief Executive Maurice R. “Hank” Greenberg and several other execs could soon scorch the $17.5 billion accounting giant....

Because of its role as a dominant force in auditing and accounting for insurance companies, PricewaterhouseCoopers’ outfit is bound to get an especially close going over from regulators and shareholders alike. Certainly. the outfits were close. PwC or its predecessor companies, such as Coopers & Lybrand, had done work for AIG going back more than 20 years.

How deep were the ties? Recently ousted Chief Financial Officer Howard I. Smith, whom AIG fired for refusing to cooperate with investigators in the latest probes, had worked at Coopers & Lybrand for 19 years and was the head partner in its New York insurance practice before joining AIG in 1984...

More important, PwC was AIG’s auditor through its long years of questionable dealings. AIG on Mar. 30 said that deals with a Barbados-based insurance company, for instance, may have been incorrectly accounted for over the past 14 years, because an AIG-affiliated company may have been secretly covering that insurer’s losses.

If AIG has to unwind its dealings with the Barbados company, it may be forced to take a big earnings hit.

~ ~ ~

April 8, 2005

AIG seen struggling to meet deadline

Observers say the embattled insurance firm will be
issuing updates to its statements for months.

CNNMoney

NEW YORK (Reuters) - American International Group Inc. has assured investors it will work “around the clock” to finish its accounting review, but concerns remain over whether it can avoid missing another deadline for filing its annual report....

A source familiar with the probe said the process is so complex that there was a likelihood that AIG may not even be able to file the 10-K by its April 30 deadline. “They still have a lot of outstanding items and transactions that have not been looked at at this point,” the source said....

PricewaterhouseCoopers, the accountants for AIG, declined to comment.

AIG’s review is covering much the same ground as probes by New York Attorney General Eliot Spitzer and the Securities and Exchange Commission, which sources have said are examining everything from reinsurance deals with offshore entities to the suspect accounting for a transaction with Berkshire Hathaway Inc.’s General Re.

One deal AIG has said it is probing dates back 14 years.

And while Spitzer said this week he expects to reach a civil settlement with AIG – rather than bring criminal charges – investigators and the company cannot begin to work out a deal until dozens of deals are vetted....

One challenge to the investigation is the sheer size of AIG: 90,000 workers and operations in 130 countries. In its 113-page annual report from 2003, the company listed about two dozen significant subsidiaries involved in the insurance businesses, financial services and retirement services.

And beyond Spitzer and the SEC, regulators in Ireland and Bermuda are involved in the probe....

~ ~ ~

April 7, 2005

AIG execs ran Bermuda insurer

CNN Money

NEW YORK (Reuters) - American International Group Inc. executives managed a Bermuda reinsurance company that AIG had said was not affiliated with it but that may have been used to burnish the insurer’s financial results, the Wall Street Journal reported Thursday....

The report of the arrangement comes as regulators scrutinize AIG’s relationships with offshore reinsurers in which it had an interest. Regulators want to know if AIG used them to hide liabilities or to artificially boost income.

Astral Reinsurance Co. acted as a reinsurer for AIG from 1984 through 1998, theJournal said, citing regulatory filings.

The Bermuda-based company controlled more than $1.8 billion of AIG stock and was managed for more than two decades by top AIG executives, including Michael Murphy, AIG’s Bermuda-based legal counsel whose employment was recently terminated by AIG for his refusal to co-operate with regulators’ investigations....

~ ~ ~

March 28, 2005

AIG Chair Greenberg to Retire Amid Probe

Forbes

Maurice “Hank” Greenberg will retire this week as chairman of American International Group Inc., ending a four-decade career with the insurance company as regulators investigate questionable financial transactions that occurred during his tenure....

There had been widespread speculation about how long New York-based AIG would continue its relationship with Greenberg, as investigations by the Securities and Exchange Commission and New York State Attorney General Eliot Spitzer have intensified in recent weeks....

Greenberg is scheduled to give a deposition to Spitzer on April 12....

~ ~ ~

March 28, 2005

Source: SEC Subpoenas 12 AIG Executives

Forbes

The Securities and Exchange Commission has sent subpoenas to a dozen executives at American International Group Inc. amid several probes into whether questionable transactions were used to improperly bolster the insurance titan’s financial standing, a person familiar with the matter said Monday.

The person, speaking on condition of anonymity and confirming a report Monday in The Wall Street Journal, also said federal investigators were aware of 10 transactions that warranted review....

[Maurice R.] “Hank” Greenberg ,79, was replaced as chief executive two weeks ago - though retained as chairman - as regulatory scrutiny mounted over a 2000 transaction that appeared to have been used to boost the company’s reserves artificially....

Under investigation are a number of reinsurance transactions – insurance purchased by insurance companies – that regulators contend were designed to improve AIG’s financial statements without the transfer of risk. Risk transfer is necessary for a deal to be an insurance transaction and determines how it’s carried on a company’s books.

On Sunday, the company forced out another longtime executive, Michael Murphy, a confidante of Greenberg and an expert of tax matters who is based in Bermuda, the Journal reported citing unidentified sources.

AIG spokesman Chris Winans said Murphy was terminated “for failure to cooperate with investigators.”...

A number of other AIG executives have been dismissed, including four who entered guilty pleas in the probe launched by Spitzer into bid rigging and price fixing by New York-based broker Marsh & McLennan Companies Inc.

~ ~ ~

March 25, 2005

AIG’s Accounting Concerns Grow

Forbes

American International Group Inc., one of the world’s biggest insurance companies, is considering a move to clean up suspected accounting mistakes that may total as much as $3 billion from as many as 30 insurance transactions, The Wall Street Journal reported in Friday’s editions.

The Journal, citing unidentified sources familiar with the case, said potentially problematic accounting now being examined is far broader than was believed just a week ago.

AIG has yet to assess an additional 60 transactions that internal investigators have identified as possibly problematic, one person familiar with the matter told the Journal. A number of senior AIG executives were aware of many of these transactions, which could subject them to regulatory scrutiny, the source told the newspaper....

Last week, questions over AIG’s accounting of an insurance transaction with a Berkshire Hathaway Inc. unit led to the ouster of Maurice R. “Hank” Greenberg as AIG’s chief executive after nearly four decades at the helm. Investigators continue to examine whether AIG misled investors by manipulating its books.

This week, AIG, which has pledged to cooperate with investigators, fired its chief financial officer and a senior reinsurance executive after they decided not to answer some questions on the grounds that their answers might be self-incriminating....

~ ~ ~

March 22, 2005

AIG Fires 2 Execs for Failure to Cooperate

Forbes

American International Group Inc. one of the world’s biggest insurance companies, fired two top executives for failing to cooperate with government investigators, a spokesman for the company said Tuesday.

The dismissals of Howard I. Smith, who had been AIG’s chief financial officer, and Vice President Christian M. Milton, were first reported in Tuesday editions of The Wall Street Journal.

AIG spokesman Chris Winans said that the men were terminated because of company policy “that requires employees to cooperate with government authorities on matters pertaining to the company.”

The Journal said AIG took action after the men signaled they would invoke their Fifth Amendment rights against possible self-incrimination amid a probe into whether AIG manipulated its books to mislead investors....

The Journal said both Smith and Milton were likely to be knowledgeable about a transaction under scrutiny by federal and state regulators involving General Re Corp., a unit of Berkshire Hathaway Inc.

Smith reportedly met Monday with investigators from the offices of New York Attorney General Eliot Spitzer and the Securities and Exchange Commission....

The probe by Spitzer, the SEC and federal prosecutors involves a complex deal involving reinsurance, which the investigators allege may have been used to manipulate AIG’s books rather than spread risk. AIG reportedly booked $500 million in premium revenue from General Re and then added $500 million in reserves to its balance sheet. The transactions took place in late 2000 and early 2001....

The Journal also reported Tuesday that regulators have expanded their probe into AIG’s reinsurance dealings to include the company’s relationships with two obscure reinsurers - Union Excess Insurance Co. and Richmond Insurance Co., both located in Barbados.

At issue, the paper said, is whether Union Excess and Richmond Insurance are independent companies or under AIG’s control and whether AIG properly accounted for transactions with the companies.

~ ~ ~

March 15, 2005

AIG Turns to a Slate of New Leaders

Forbes

American International Group Inc. shuffled its management team, removing longtime CEO Maurice “Hank” Greenberg, in a first step toward trying to resolve widening federal and state probes into its property and casualty insurance business....

Unnerved shareholders pushed AIG stock down $1.96, or more than 3 percent, to $61.89 in afternoon trading on the New York Stock Exchange....

AIG’s board said Greenberg, 79, would retire from the chief executive post he held for nearly four decades but will remain nonexecutive chairman of the New York- based company.

British-born Martin J. Sullivan, 50, who had served as vice chairman and co-chief operating officer, was named CEO - only the third man to hold the post since AIG’s founding in 1919.

The board said that Steven J. Bersinger would be given the title of chief financial officer. It said Berisinger was replacing Howard I. Smith, “who has taken leave.” Company officials declined further comment on the matter.

The board also announced that it would delay for at least two weeks the filing of its annual report, which had been expected on Wednesday.

Donald Light, a senior analyst with the research and consulting firm Celent Communications Inc. in Boston, said that investors were spooked by that.

“When a company is in crisis and replaces its CFO, it’s like putting a sign outside the building saying ‘our financial statements are about to change in a bad way,” Light said.

He added that the continuing regulatory probes “will be a distraction for whoever is managing the company.”

New York Attorney General Eliot Spitzer, federal prosecutors and the Securities and Exchange Commission are looking into the use of so-called finite insurance, or financial reinsurance, which they contend can be used to manipulate earnings.

One of the transactions being probed took place between AIG and Berkshire Hathaway Inc.’s General Reinsurance unit four years ago and apparently was intended to shore up AIG’s reserves. Reports have said Greenberg was personally involved.

Ratings agencies moved quickly to downgrade AIG’s debt ratings or put them on watch for downgrading....

An earlier Spitzer probe into bid rigging and price fixing resulted in the resignation of Jeffrey Greenberg last October as chairman and chief executive of the insurance brokerage Marsh & McLennan Companies Inc. Marsh & McLennan reached a settlement in the case Jan 31, agreeing to pay $850 million in restitution.

Evan Greenberg remains president and chief executive officer of Bermuda-based ACE Ltd.

~ ~ ~

February 16, 2005

3 from AIG and Marsh
admit insurance fraud

Bloomberg News

Two executives from American International Group and one from Marsh & McLennan pleaded guilty Tuesday to fraud charges resulting from a sweeping investigation into the insurance industry by the New York State attorney general, Eliot Spitzer.

The men, Josh Bewlay, a former managing director in Marsh’s global broking unit, and Carlos Coello and John Mohs of AIG, pleaded before a New York State Supreme Court judge, James Yates. Coello is an underwriter in an AIG liability insurance unit and Mohs has worked as an assistant vice president in the same unit, their lawyers said.

Spitzer, who is investigating kickbacks and collusion between insurers and brokers, has charged six other executives from Marsh, AIG, Ace and Zurich Financial Services since he sued Marsh on Oct. 14.

Marsh, the largest insurance broker in the world, ousted its chief executive and agreed last month to pay $850 million to settle its case.

Bewlay, Coello and Mohs were led out of a New York Police Department precinct in Lower Manhattan in handcuffs before appearing in court....

~ ~ ~

January 8, 2005

ST. PAUL LINKED TO MARSH FRAUDS

By Diane Levick, The Hartford Courant

The St. Paul Cos. - now part of The St. Paul Travelers Cos. - was among the insurers that benefited from alleged bid-rigging by broker Marsh Inc., the New York attorney general’s office said.

A court document released Thursday on the guilty plea of a Marsh senior vice president draws St. Paul Travelers into the controversy, but does not make clear whether the insurer intentionally participated in any wrongdoing....

Robert Stearns, an executive in Marsh’s excess casualty business, pleaded guilty in a New York court Thursday to the felony of scheming to defraud in the first degree. It was the sixth guilty plea in a far-reaching probe of the insurance industry by New York Attorney General Eliot Spitzer.

Stearns asked various insurers to submit bids that were less favorable than others, so Marsh could steer business to maximize its profits and protect incumbent insurers on certain accounts that were up for renewal, the felony complaint says.

The sham bids were sometimes called “B Quotes” or simply “B”.

In one example in March 2003, Stearns asked a Marsh broker in an e-mail to get a B quote from insurer Zurich on an account that would be renewing insurance with St. Paul, the complaint says. Stearns suggested “325,000 should work” because St. Paul’s price was $270,000, the complaint says.

Later that day, Stearns repeated the request, and the next day, a Zurich underwriter provided a $360,000 quote to Marsh, the document says.

In another March 2003 example, Stearns was asked by another Marsh executive to get B quotes on an account that was up for renewal with American International Group. “Further e-mails reflect that Zurich, ACE, and St. Paul subsequently offered losing quotes on this account,” the complaint states.

The document does not say whether St. Paul knew its quote for the account would be used in bid-rigging.

However, a Marsh broker’s e-mail that was cited in the document strongly implies he considered the B quotes laughable, as the broker told an ACE underwriter: “need a B for [expletive] and giggles.”

The client renewed insurance with American International Group.

St. Paul Travelers was not named in Spitzer’s bid-rigging lawsuit against Marsh in October, though the suit implicated several insurers including The Hartford Financial Services Group Inc. without naming them defendants.

However, Spitzer’s office has subpoenaed information from St. Paul and dozens of other companies.

Meanwhile Friday, Spitzer said he expects the guilty pleas he has gotten so far will lead to more charges.

“We are laying the foundation with these criminal cases that permit us to make criminal cases and bring criminal actions against those more senior within the companies,” Spitzer said after a state assemble hearing in New York, according to Bloomberg News.

In addition to Stearns, guilty pleas have come from two executives at AIG, two from Zurich American Insurance Co. and one from ACE.

In another development, Marsh & McLennan Cos. Inc. said Friday it has named E. Scott Gilbert to the new post of senior vice president and chief compliance officer effective Jan. 24. He was chief compliance counsel for the General Electric Co.

~ ~ ~

November 17, 2004

Cooking the Insurance Books

A Decade of Lax Regulation Lays Groundwork for Scandal

By Lucy Komisar, Special to CorpWatch

In October, New York Attorney General Eliot Spitzer filed suit against the world’s largest insurance broker, Marsh, accusing it of rigging bids and receiving kickbacks in order to defraud clients such as other corporations, city governments, school districts and individuals of billions of dollars through inflated premiums.

“Greedy trial lawyers were the usual excuse for premium increases. Now we know that greedy corporations also have a starring role,” Spitzer said, accusing several insurance companies as co-conspirators in making phony or inflated bids and paying kickbacks to the brokerage to get business.

Spitzer also announced that two executives from the insurance conglomerate American International Group (AIG) had already confessed to related criminal charges. But his investigations into AIG may have only scratched the surface. A paper trail stretching back a decade reveals that AIG used offshore shell companies to skirt the law.

The current scam which Spitzer has uncovered works like this: Marsh, an insurance broker, is supposed to find the best insurance policies for its clients from a wide range of companies. Instead it steered the policies to companies such as AIG that agreed to pay kickbacks.

It solicited phony competitive bids for insurance contracts to deceive customers into thinking there was real competition for the business. Marsh made $800 million on kickbacks in 2003 alone - over half its $1.5 billion profit. With a 40-percent share of the global insurance brokerage market, its fraud drove up prices for everyone....

Lax Regulators Give AIG a Free Pass

At Spitzer’s press conference, New York State Insurance Superintendent Gregory V. Serio said: “This has gone from an inquiry into failure to disclose compensation to an active investigation of bid rigging and improper steering. This certainly proves the adage that where there is smoke, there is fire.”

But AIG’s comportment could not have been much of a surprise to Serio, who was New York’s deputy insurance superintendent in the late 90s. That’s when New York and three other states gave the powerful company a pass on some very questionable practices. If they had paid attention to the smoke then, perhaps this billion-dollar fire wouldn’t have ignited.

In the late 90s, four state insurance departments - New York, Delaware, Pennsylvania and California were aware that AIG was moving debt off its books via the use of an offshore shell company it secretly set up and controlled. But despite clear evidence of wrongdoing, no sanctions were ordered....

In the mid-80s, two of AIG’s reinsurers failed. The bankruptcy liquidators paid creditors, including AIG, over several years but meanwhile the amount owed was liable to show up as unacceptably high levels of debt on the AIG books.

Trevor Jones, an insurance investigator who for 20 years has run Insurance Security Services in London, explained, “Hank [Greenberg] decided to set up Coral Re [a reinsurance company] to move the debts he couldn’t claim as assets into this other company. ... No real company would play ball, because you are fiddling the accounts, moving your bad debts off your books.”

So AIG went to elaborate lengths to set up a shell company in Barbados, where capital requirements and regulation was minimal compared to the U.S., where American regulators couldn’t readily discover AIG’s involvement and where, as an added incentive, it could move money out of reach of U.S. taxes....

Though it is an American company listed on the New York Stock Exchange, AIG makes extensive use of offshore jurisdictions such as Barbados, Bermuda and Luxembourg that are immune from U.S. regulatory and tax scrutiny. They help the company launder profits to evade U.S. taxes and hide insider connections in supposedly “arms-length” deals. This is especially important as the company has moved into financial services and asset management, handling the wealth of “high net-worth” clients – the mega-rich.

Greenberg has enviable political clout, never so much in evidence as when, with the help of Henry Kissinger – chair of AIG’s international advisory committee and a paid consultant via Kissinger Associates – AIG became in 1995, the first company licensed to sell insurance in China. AIG was the only foreign firm that owned 100 percent of its license there....

Goldman Sachs and Robert Rubin

Coral Re, a Barbados reinsurance company, was launched with a private sale of shares organized by Goldman Sachs, then headed by Robert Rubin, who would become President Clinton’s Treasury Secretary and is now chairman of the executive committee of Citigroup.

A confidential memorandum ... told why the company was formed: “AIG’s interest in creating the Company is to create a reinsurance facility which will permit the U.S. companies to write more U.S. premiums. For a U.S.-domiciled company, a high level of surplus is required to support insurance premiums in accordance with U.S. statutory requirement. The statutory requirements in Barbados are less restrictive.”...

Rubin buddy Bill Clinton, then governor of Arkansas, may also have thrown his weight behind the project. The Arkansas Finance and Development Authority(ADFA), headed by a man who went to work in the Clinton White House, became lead investor, although state law banned it from buying stocks.

The new company was not a legitimately independent business. For investors, there was no money at risk; the board of directors never made a decision; and Coral Re had no office of its own but was managed by American International Management, a subsidiary of none other that AIG.

Eventually, the scheme unraveled. State insurance examiners look at company books every five years. “In 1992, Delaware examiners auditing Lexington (an AIG subsidiary) smelled a rat,” a former regulator from one of the four investigating insurance departments told CorpWatch....

Things have gotten tougher for the company since the Enron affair caused the SEC to look more serious about corporate corruption. ... Last year, AIG paid a $10 million fine to the SEC for helping the Indiana wireless telecom company Brightpoint commit accounting fraud.

AIG marketed a “non-traditional” insurance product aimed at “income statement smoothing,” spreading a loss over future reporting periods. The SEC called such financial products “just vehicles to commit financial fraud” and said the insurance giant refused to give it subpoenaed documents, compounding its misconduct. The U.S. Justice department is currently investigating but has yet to file criminal charges.

Business Insurance, a trade publication, editorialized on the timidity of regulators for giving AIG “little more than a tap on the wrist” in exchange for “a promise not to do it again.”

“The message delivered here is that a company of AIG’s power and complexity can afford to be openly hostile to state oversight and, in the end, have things pretty much its own way. That is a disheartening message, indeed,” wrote the magazine’s editors....

Lucy Komisar is an investigative journalist who is writing a book about offshore bank and corporate secrecy. She receive research assistance on this report from the Arkansas Committee. The committee was started in 1990 by University of Arkansas students, who, suspicious that Arkansas Development Finance Authority was selling more bonds than it could use to finance state projects, demanded the agency’s documents under the Freedom of Information Act. It fought the case to the Arkansas Supreme Court before it got the papers describing the AFDA deal to buy shares of Coral Re.

~ ~ ~

October 16, 2004

Guilty Plea in Insurance Inquiry
as Stocks Fall

www.washingtonpost.com

A third insurance company executive pleaded guilty yesterday to criminal charges in connection with New York state Attorney General Eliot L. Spitzer’s investigation of payoffs and bid-rigging in the insurance industry.

Patricia Abrams, assistant vice president in the excess casualty division of ACE Ltd., pleaded guilty in state court in Manhattan to attempted combination in restraint of trade, a misdemeanor, acknowledging that she had helped Marsh & McLennan Cos. brokers rig bidding for corporate liability insurance policies.

Spitzer caught Abrams saying in a December 2000 e-mail that she increased ACE’s bid for a particular policy from $990,000 to $1.1 million because Marsh brokers wanted another company, American International Group Inc., to win the business.

Abrams is cooperating with Spitzer’s office.

Marsh & McLennan, the nation’s largest insurance broker, said yesterday it is suspending its practice of using “market services agreements” with insurance carriers, which Spitzer has alleged were used to rig bids.

The agreements – also known as contingent commissions or placement service agreements – are at the center of a lawsuit he announced Thursday accusing New York-based Marsh & McLennan of taking payoffs from insurance companies to steer corporate clients their way, rather than get those customers the best prices for corporate property and casualty policies....

On Friday, the chairman and chief executive of AIG, Maurice R. “Hank” Greenberg, said in a conference call with analysts that the company had launched its own investigation of the allegations, using outside investigators, and is cooperating fully with Spitzer’s office.

Hank Greenberg, who is the father of the Marsh & McLennan chief executive, told analysts that AIG had sought guidance from New York state insurance regulators about contingent commissions long before Spitzer’s investigation began.

He said that AIG queries in July 2002 and in October 2003 were unanswered....

~ ~ ~

February 6, 2004

KERRY GETS MONEY AFTER
BLOCKING LEGISLATION

Insurer donates to his presidential campaign

By John Solomon, Associated Press

WASHINGTON - John Kerry intervened in the Senate to keep open a loophole that had allowed a major insurer to divert millions of federal dollars from the nation’s most expensive construction project, then received tens of thousands of dollars in donations from the company during the next two years, documents show.

American International Group paid Kerry’s way on a trip to Vermont and donated at least $30,000 to a tax-exempt group Kerry used to set up his presidential campaign. Company executives also donated $18,000 to his Senate and presidential campaigns, according to records obtained by The Associated Press.

But Kerry, the current leader of the Democratic presidential race, says there was no connection between his actions in 2000 and the donations that followed in 2001 and 2002....

The Massachusetts senator said he had worked in 2000 to block the legislation solely because it would have cost Boston’s “Big Dig” $150 million.

The legislation would have closed a loophole that had allowed the American International Group to divert millions of federal dollars from the project for its own use.

Basically, Big Dig managers had overpaid American International almost $130 million for unneeded insurance, then allowed the insurer to invest it in the market....

“John Kerry has long supported getting special interest money out of the political system,” campaign spokeswoman Stephanie Cutter said. “If anybody believes that a political contribution influences John Kerry then they are wasting their money.”

But some government watchdogs said Kerry’s story is a textbook case of Washington special interest politicking that he rails against on the presidential trail.

“The idea that Kerry has not helped or benefitted from a specific special interest, which he has said, is utterly absurd,” said Charles Lewis, head of the Center for Public Integrity, which just published a book on political donations to the presidential candidates.

“Anyone who gets millions of dollars over time, and thousands of dollars from specific donors, knows there’s a symbiotic relationship,” Lewis said.

“He needs the donors’ money. The donors need favors. Welcome to Washington. That is how it works.”

The documents obtained by the Associated Press detail Kerry’s effort as a member of the Senate Commerce Committee to persuade committee chairman John McCain, R-Ariz., to drop legislation that would have stripped $150 million from the Big Dig project and closed the insurance funding loophole....

When the “AIG investment scheme (came) to light, John Kerry called for public hearings to investigate the parties involved and the legality of the investment practices. However, he firmly believed cutting funding for the Big Dig was not the answer,” Cutter said.

Instead of McCain’s bluntly worded legislation, Kerry asked for a committee hearing in May 2000. Kerry thanked McCain at the start of the hearing for dropping his legislation and an American International executive was permitted to testify that he believed the company’s work for the Big Dig was a good thing even though it was criticized by federal auditors.

Asked why Kerry would subsequently accept a trip and money from American International in 2001 and 2002 if he was concerned by the investment scheme, Cutter replied: “Any contributions AIG made to the senator’s campaign came years after the investigation.”

The New York-based insurer, one of the world’s largest, declined to comment on its donations to Kerry, simply stating, “AIG never requested any assistance from Senator Kerry concerning the insurance we provided the Big Dig.”

The Big Dig project has become a symbol of government contracting gone awry, known for cost overruns that now total several billion dollars and its admissions of mismanagement.

During the 1990s, Sens. Kerry and Edward Kennedy, D-Mass., helped win new federal funding for the project as its costs skyrocketed and threatened to burden the state’s government. In 1998, Kerry was credited with winning $100 million in new federal funding.

But in 1999, Transportation Department auditors discovered that Big Dig managers had overpaid $129.8 million to American International for worker compensation and liability insurance that wasn’t needed, then allowed the insurer to keep the money in a trust and invest it in the market.

The government alleged American International kept about half of the profits it made from the investments, providing the other half to the project.

In September 2001, American International paid an estimated $540 in travel expenses to cover Kerry’s costs for a speech in Burlington, Vt., according to a Senate report filed by Kerry.

A few months later in December 2001, several company executives gave maximum $1,000 donations to Kerry’s Senate campaign on the same day. The donations totaled $9,700 and were followed by several thousand dollars more over the next two years.

Kerry wasn’t the only committee member to get donations from the insurance company.

In 1999 and early 2000 as the Big Dig issue was pending, McCain received several thousand dollars in donations from executives of the insurer, the records show.

~ ~ ~

Further proof that AIG is strictly BI-PARTISAN when it comes large campaign contributions:

November 18, 2003

$100K From Special Interest
For Special Session

By Doug Heller, Washington Monthly

Day 2 of the Arnold Administration – If we told you that the governor accepted a huge campaign contribution from the state’s largest private workers’ compensation insurer just before opening a special legislative session on workers’ comp, you’d be sure that we accidently got our wires crossed and were looking at some old story from the Gray Davis files.

And if we added that the governor used a loophole in campaign limits – putting the money in an old campaign committee, so he could accept a donation that is nearly five time larger than contribution limits allow – you’d be sure we had mistakenly opened Cruz Bustamante’s campaign finance disclosures.

That kind of special interest politics-as-usual is exactly what Arnold came to office to clean up, right?

Apparently not.

We have just learned that mega-insurer American International Group (AIG) donated $100,000 to Arnold last week. The company wants to keep insurance rate regulation off the table during the workers’ compensation special session that the governor convened today.

Will Arnold treat AIG equally and look to reform the insurance companies just as he goes after other players in the workers comp debate (namely workers, doctors and lawyers) or will this big contributor get a break?

Arnold told us that things would be different, but already it looks a lot like more of the same.

http://www.consumerwatchdog.org/arnoldwatch/Default.html

~ ~ ~

September 25, 2004

Dobelle legal costs hit $1M

By Vicki Viotti, Honolulu Advertiser

The ouster of former University of Hawaii President Evan Dobelle will cost the university about $1 million in fees from lawyers hired by the Board of Regents to negotiate a settlement and fees for his attorneys, university records show.

And while university officials are still haggling over how much the settlement will finally cost taxpayers, several said yesterday that the legal bill is less than what it would have cost to buy out Dobelle.

The bill, which includes $290,000 paid to Dobelle’s legal team, and an estimated $750,000 due to UH lawyers, enabled the university to avoid at least $4.5 million that would have been paid if Dobelle had been fired without cause and his contract paid off, regent Kitty Lagareta said.

Officials involved in negotiating Dobelle’s exit package said yesterday that talks are ongoing with the UH carrier, National Union Fire Insurance Co. of Pittsburg [a member company of American International Group, Inc.], in hopes that the policy will cover most or all of the costs, including legal bills....

~ ~ ~

July, 2004

CHINA’S EMPTY SILVER VAULT

Charles Savoie, Silver Investor

Let’s talk about the People’s Bank of China and its silver vault, from whence has come most of the manipulated silver supply with which to maintain the price suppression, since sometime in 1999. As a gentlemen formally known to us as Theodore first pointed out, the Pan American Silver 2003 annual report ... had remarks about some 300 million plus ounces of silver that have found their way out of official Chinese government holdings in the last 4 years, enough to keep the deficit emergency under wraps.

In his April 10, 2002 commentary, “The China Silver Syndrome,” Ted was of the view that China wasn’t dumping its government held silver. ... We thought it was rumor, but it turned out to be fact – another ugly fact in a long parade of ugly facts favoring the users and the paper money mob!...

Butler, in keeping with being a news source monitor, informed the silver community of the Reuters story dated June 1, 2004, that American International Group (AIG) just exited the gold and silver markets, and is no longer involved with the COMEX ("CRIMEX") silver delivery process. The likeliest reason would appear, they cannot access any more Chinese silver, because the Chinese silver vault is EMPTY!

The fact that both Maurice Greenberg of AIG, and his son Jeffrey, a trustee of the anti-silver Brookings Institution (once chaired by Douglas Dillon, Treasury Secretary who took us off silver coins) are both members of the Trilateral Commission, along with Zhou Xiaochuan, head of the People's Bank of China, places them in an insider's position for having access to that Chinese silver vault, and for knowing when the depletion is absolute. This, undoubtedly, is why AIG exited the silver market!

Skadden Arps, the law firm Eliot Spitzer came from, represents AIG! We must assume that at some future date when his political career is over, he will want a well-placed job, and will refrain from offending powerful elements, such as coming down on high paying clients of his former law firm!

Fines amounting to a slap on the wrist are merely to appease the public and do NOT constitute justice!

The senior Greenberg also chairs the Asia Society, a British/American influence group over Asia founded in 1956 by John D. Rockefeller 3rd (WMP) and today Senator Rockefeller IV (WMP) is a trustee.

Greenberg is a member of the President's advisory committee on Trade Policy & Negotiations, in which capacity he backed China's entry into the World Trade Organization (WTO) in 2002. Additionally, Greenberg chairs the U.S./China Business Council and campaigned for "most favored nation" trade status.

This is someone you would think favors are owed. With China having passed the $400 billion mark against America in foreign exchange totals this represents a considerable danger. We have something called the U.S. Trade Deficit Review Commission that pretends concern, but consider that its members include Wayne Angell, a Federal Reserve governor from 1986 through 1994 and a member of the anti-precious metals American Economic Association; Robert Zoellick, who was on the Enron advisory board, as well as the Goldman Sachs advisory board; and Donald Rumsfeld, Mr. $1.61 an ounce silver from the Nixon era.

Greenberg is a person with all necessary links to Red China for any silver dealings that have taken place. Of course, everything has transpired away from public view and open documentation. It would be amusing to see Greenberg questioned by Congress after the silver scandal erupts; and that outrageous child of his also!

Recall that Barber Conable, ex of the World Bank, is an AIG director; as is Marshall Cohen of Barrick Gold; and Frank Wisner, ex-Ambassador to the Philippines, a country whose central bank leased silver; two Chinese; and William Cohen, ex-Secretary of Defense, who mentioned how the U.S. has "given" military secrets to China (see "Michael Gorham's Paper Money Mob," June 2004).

In connection with "Silver Users And Opium" (Archives, March 2004) take note that Cornelius V. Starr, founder of AIG, was linked to drug trafficking in Asia ("The War Conspiracy," 1972 by Peter Scott, see chapter 6, "Opium, the China Lobby and the CIA"), Maurice Greenberg of AIG is one of the personalities sometimes mentioned as a possible CIA chief!

In any Asian drug trafficking, the so-called Chinese "Triad" mobs are involved at street level. Barclay's Bank International, London (Committee of 300 World Money Power) is the largest AIG shareholder...

It should also be kept in mind that Greenberg is vice chairman of the Council on Foreign Relations, in which some 1500 plus bankers, diplomats, generals, admirals, corporate executives and other establishment wheelhorses hold membership; and that its honorary chairman is David Rockefeller of the World Money Power, who started the China trade in the early 1970's after discussions with Red leaders....

The traces of the paper money mob and the silver users to China and the Far East are eyebrow raising. Greenberg senior has also chaired the U.S./Philippines Business Council, this of a country suspected of its central bank having taken part in the dirty silver leasing business. Charles Englehard (born 1917), who in 1953 became head of Englehard Industries, Silver Users Association members, was, like Volcker today, a director of Prudential Insurance....

On page 227 of "Beyond Greed---The Hunt Family's Bold Attempt To Corner The Silver Market" (Viking Press, New York, 1982), Stephen Fay alleged that it was Charles Englehard who provided the real life model for Ian Fleming's fictional "Goldfinger," of James Bond fame!...

www.silver-investor.com/cs_july04.htm

~ ~ ~

October 28, 2003

HOW TO MAKE A BILLION DOLLARS

MOSCOW - Rich in Russia

From PBS Frontline

Just five days before FRONTLINE/World’s broadcast of “Rich in Russia,”Russian oligarch Mikhail Khodorkovsky was seized at gunpoint by Russian federal agents in Siberia while refueling his private jet. Khodorkovsky’s dramatic arrest and detention on charges of fraud and tax evasion follows a months-long government investigation of his company Yukos.

Khodorkovsky claims the attack is politically motivated, because he has bankrolled the campaigns of opposition party candidates running in the December 2003 parliamentary elections. (President Vladimir Putin is preparing to seek a second term in March 2004.) If convicted, Khodorkovsky could face up to ten years in prison.

~ ~ ~

Mikhail Khodordovsky

BILLIONAIRE INDUSTRIALIST

Mikhail Khodorkovsky, 40, Russia’s wealthiest man, made his first fortunes in banking. Born in 1963, he was raised in a communal apartment in Moscow by factory worker parents. As a child he talked of becoming a factory director, and later he became an active member in Kommosol (Communist Youth League)....

By 1990, Khodorkovsky had founded Menatep, a bank with profits rumored to be supplemented by funds controlled by various Kommosol, Central Committee and KGB groups attempting to divert state funds. When the old order collapsed, Menatep provided credit to state enterprises and regional offices while they waited for the new government to establish financial flows.

Khodorkovsky also set up a market for state vouchers, and at this time he gained control of several enterprises. Through his holding company, Rosprom, Khodorkovsky snatched up chemical, construction, textile, mining and oil enterprises.

In 1995, he purchased Yukos, Russia’s largest oil company for a mere $309 million– today it is valued at $15 billion.

In 2003, he became a main target of the Kremlin’s anti-oligarch crackdown. After raiding his offices and arresting Khodorkovsky’s close business associate, investigators went after several other people and companies affiliated with Khodorkovsky for fraud, tax evasion and even murder.

In October 2003 Khodorkovsky was seized at gunpoint by Russian federal agents on charges of fraud and tax evasion.

Estimated Worth:

$8 billion

Current Position:

Founder, Menatep Group

Major Holdings:

Yukos

Other Interests:

Bank Menatep, Trust Investment Bank and Menatep International Financial Alliance; investment firms Global Asset Management, the Blackstone Group, the Carlyle Group and AIG Capital Partners; information technology company Sibintek; telecom operators MKS, Macomnet, Metrocom, Rascom and Magistral Telecom; and, through his Open Russia Foundation, several Russian news publications

Political Connections:

Khodorkovsky cultivated relationships with government officials through his bank, Menatep, which served the accounts of many state enterprises and regional governments. Three years before his acquisition of oil company Yukos, Khodorkovsky was appointed to the Ministry of Fuel and Energy.

In 1996, he was among the Big Seven, Russia’s most influential bankers who backed the reelection of President Boris Yeltsin. Khodorkovsky’s longtime partner, Leonid Nevzlin, is a senator in the Federation Council (the upper chamber of the Russian parliament; seats in the Federation Council are appointed). Despite an informal pact Russian oligarchs made with Putin in 2000 that they would stay out of politics, Khodorkovsky has become increasingly involved in the Kremlin’s affairs. He has financed two liberal opposition parties, Yabloko and the Union of Right Forces, upsetting Putin’s dominance in the Russian parliament....

Lifestyle:

Khodorkovsky lives with his wife and four children in Moscow. He frequently travels to the United States. He reportedly dined with Condoleezza Rice last year and recently was a guest at Herb Allen’s Idaho ranch, along with Bill Gates, Warren Buffett and other luminaries, for an annual telecommunications executives meeting.

Notoriety:

After a series of dubious business practices, Khodorkovsy has struggled with a poor public image. In 1998, his bank Menatep collapsed, yet Khodorkovsky managed to protect himself, despite damage to his depositors and creditors. (The bank also defaulted on a $236 million loan from Western banks.)

In 1999, he moved the location of a Yukos shareholders meeting 160 miles from Moscow without advance notice to minority stockholders, keeping them from voting against the sale of Yuko’s assets to an offshore company. That same year, he prepared a large issue of new shares that diluted the stake of American investor Kenneth Dart, who claimed Khodorkovsky defrauded him of millions of dollars. Recently, however, Khodorkovsky hired a Washington, D.C., public relations firm, and he is presenting himself as a crusader for stockholder and investor rights.

Khodorkovsky donated $1 million of Yukos profits to the U.S. Library of Congress, and he set up the Open Russian Foundation, with Henry Kissinger as a member of its board of trustees, to donate to museums, hospitals and universities. In 2001 and 2002, Khodorkovsky’s net worth increased fourfold.

~ ~ ~

September 12, 2003

FOR AIG, WHAT GOES AROUND COMES AROUND

A “round-trip of cash” disguised as “insurance” is too smooth
for the Securities and Exchange Commission.

By Stephen Taub, CFO.com

The Securities and Exchange Commission has announced that American International Group Inc. agreed to pay $10 million to settle fraud charges related to its role in an accounting fraud at Brightpoint, a cell-phone distributor.

In addition, the SEC brought charges against four executives, including former Brightpoint chief financial officer Philip Bounsall....

In bringing the fraud charges against AIG, the SEC accused the company with developing and marketing a so-called “non-traditional” insurance product for the stated purpose of “income statement smoothing.”

Brightpoint used that product to hide $11.9 million in losses and to overstate earnings by 61 percent in 1998, said the commission, adding that the $10 million civil penalty reflects AIG’s participation in the Brightpoint fraud, as well as misconduct by AIG during the investigation.

“AIG worked hand in hand with Brightpoint personnel,” said Wayne M. Carlin, regional director of the commission’s Northeast Regional Office, “to custom-design a purported insurance policy that allowed Brightpoint to overstate it’s earnings by a staggering 61 percent.”

Added Carlin: “This transaction was simply a ‘round-trip’ of cash from Brightpoint to AIG and back to Brightpoint. By disguising the money as ‘insurance,’ AIG enabled Brightpoint to spread over several years a loss that should havbe been recognized immediately.”

AIG agreed to make it appear that Brightpoint was paying premiums in return for an assumption of risk by AIG, the SEC elaborated in its complaint. “In fact, Brightpoint was merely depositing cash with AIG that AIG refunded to Brightpoint,” it added.

In addition to Bounsall, the commission charged John Delaney, Brightpoint’s former chief accounting officer; Timothy Harcharik, Brightpoint’s former director of risk management *; and Louis Lucullo, an AIG assistant vice president.

It claimed that Delaney and Harcharik negotiated the arrangement with Lucullo, and Bounsall approved the insurance transaction without adequately reviewing it.

Without admitting or denying the charges, Brightpoint agreed to pay a $450,000 civil penalty, Bounsall agreed to pay a $45,000 civil penalty, and Delaney consented to the entry of a permanent injunction barring future securities law violations, a permanent bar against his serving as an officer and director of a public company, and a judgment ordering him to pay a $100,000 civil penalty....

~ ~ ~

September 12, 2003

AIG PAYS $10 MILLION FOR ALLEGED FRAUD

‘Insurance policy’ helped second company
falsify earnings report

Associated Press

WASHINGTON – American International Group, one of the biggest U.S. insurance companies, yesterday agreed to pay a $10 million fine to settle federal regulators’ allegations that it fraudulently helped another company falsify its earnings report and hide losses.

The insurer, known as AIG, also failed to provide documents subpoenaed during the government’s investigation of the alleged fraud involving financial reports by cellular-phone distributor Brightpoint Inc., the Securities and Exchange Commission said.

AIG, of New York, neither admitted nor denied the SEC’s allegations in its settlement, in which it also is forfeiting a $100,000 fee paid by Brightpoint.

The SEC also charged Brightpoint, a distributor of wireless phones for companies, including Nokia, Sony-Ericsson and Virgin, and three former Brightpoint executives and an assistant vice president of AIG. Brightpoint agreed to a $450,000 fine, and three of the individuals settled, agreeing to fines of as much as $100,000. Brightpoint and the three individuals neither admitted nor denied wrongdoing.

The SEC alleged that AIG issued a “non-traditional” insurance policy to Brightpoint to help the company hide $11.9 million in losses in 1998. The insurance policy was said to be for the company to smooth out volatility in earnings....

Last February, AIG announced that it was taking a $1.8 billion charge to cover unexpectedly costly insurance claims, blaming the move on soaring increases in jury verdicts and legal settlements. AIG is widely seen as an industry leader, often ahead of others in responding to changes in the insurance marketplace.

Brightpoint, of Plainfield, Ind., in late 2001 restated its earnings for the previous 3 ½ years. That led to shareholder lawsuits against the company.

Jerre Stead, lead independent director of Brightpoint, said the settlement will enable Brightpoint’s management “to focus on the company’s core business, and represents the final step in resolving all stockholder and regulatory matters relating to the 1998 purchase of the purported insurance policy.”

Shares of AIG were down 43 cents to close at $60.15 on the New York Stock Exchange.

~ ~ ~

October 7, 2002

GREAT NUMBERS, WEAK GOVERNANCE

IS AIG A SPECIAL CASE?

By John A. Byrne, BusinessWeek

By almost any measure, the board of insurance giant American International Group Inc. is a throwback. With 20 members, it seems too large to encourage meaningful discussion. With nine AIG execs holding seats, it includes far too many insiders. It even lacks a single currently active executive among its independent directors. Until only recently, the board also failed to have a separate nominating committee to ensure that its outside directors are truly independent.

Perhaps more troubling, seven of the inside directors, including Chairman and CEO Maurice R. “Hank” Greenberg, control and run two private companies that have substantial business dealings with AIG, leaving the execs open to charges of self-dealing and conflicts of interest.

One of these companies is a veritable bank vault, paying out tens of millions in cash and stock to AIG executives outside the purview of the board’s compensation committee.

No wonder many governance experts consider the board among the weakest in Corporate America.

But don’t tell Greenberg that. “Calling us one of the worst boards in America would be an atrocious distortion of fact,” he says, pointing to the superior results the insurer has posted since he took it public 33 years ago as evidence that the unusual governance structure he set up then works.

There’s no doubt that Greenberg has delivered outstanding results. He built AIG into a global powerhouse, the most successful company in the world. Under his leadership, the insurer’s market value has ballooned to more than $140 billion, up from just $452 million in 1969, when he took AIG public. Net income soared to $5.4 billion last year. . . . In the past five years, it has handily outperformed its peers, and the Standard & Poor’s 500-stock index.

Most shareholders aren’t overly concerned about AIG’s governance. “There’s not a lot that I can complain about based on what this company has delivered,” says Kevin W. Callahan of Boston-based Century funds, which owns more than 450,000 AIG shares. “This is a strong, well-managed company.”

Is AIG a special case? Or is Greenberg clinging to a governance model more appropriate to a private partnership that does not avail itself of the public capital markets?

At least by the standards of governance experts, AIG’s unique structure doesn’t stand up. Some critics say the strong-willed Greenberg is out of touch, resisting the expectations that shareholders now place on public corporations. Until two years ago, insiders made up the majority of the board. When Greenberg served on the New York Stock Exchange’s governance committee earlier this year, he was in the losing minority in arguing that a board should not be required to have a separate nominating panel....

Greenberg argues that the large number of inside directors, who together own 25% of AIG’s outstanding stock, allows for more meaningful discussion. “Their interests are directly aligned with those of the shareholders,” he says....

As for the outside directors, who are mostly retired, Greenberg insists they have more time to devote to their board duties than fully employed execs. And he defends their credentials.

“How many people can I get who understand trade issues with Japan and China as well as [former U.S. Trade Representative] Carla Hills?” he asks.

“Who knows more about infrastructure funds around the world than Barber Conable, who ran the World Bank? Christ, this is a good board.”...

But governance critics note that a separate compensation scheme controlled by Greenberg and a handful of insiders can have a perverse effect. “Since the top officers control it, the compensation program could stifle any dissent that could legitimately come before the board, says Delaware’s Elson.

“It creates a company within a company that is at odds with the transparency we expect from a public corporation.”

Yet another private outfit, C.V. Starr & Co., has a small collection of insurance agencies that were losing money when Greenberg took AIG public. He says he didn’t want to saddle AIG’s new investors with the business. So he and the same group of insiders kept ownership of the now-profitable agencies.

If they had included this business in the original AIG public offering, however, AIG’s shareholders may have realized benefits from that turnaround. Last year, AIG paid $77 million in commissions to this private entity, run and controlled by Greenberg and other AIG insiders.

Isn’t that a blatant conflict of interest?

Not at all, argues the CEO. Greenberg maintains the transactions are at arm’s length and often are less advantageous to the Starr agencies. “We try to bend over backward to be even more evenhanded,” he claims.

“AIG gets hundreds of millions of dollars in premiums that way. Where’s the conflict?”...

~ ~ ~

September 11, 2001 <<< (Note the date!)

Conseco Sues Six D&O Insurers
Over Litigation Coverage

Conseco Inc. is suing six of its own insurers, claiming they are attempting to dodge legitimate potential claims on directors and officers policies bought by the Indianapolis-based insurer.

In its annual 10-Q filing with the U.S. Securities and Exchange Commission, Conseco said it "maintained certain directors' and officers' liability insurance that was in force at the time the Indiana securities and derivative litigation was commenced and, in our view, applies to the claims asserted in that litigation," according to BestWire.

The Indiana litigation involves 45 lawsuits filed against Conseco in U.S. District Court for the Southern District of Indiana. Conseco said 19 of those cases were putative class actions on behalf of people or entities that purchased the company's common stock during alleged class periods that generally run from April 1999 through April 2000.

In those cases, plaintiffs allege that the company and individual directors and officers violated federal securities laws by, among other things, making false and misleading statements about the then-current state and future prospects of Conseco Finance – particularly with respect to performance of certain loan portfolios of Conseco Finance – which allegedly rendered the company's financial statements false and misleading.

Because it had directors and officers coverage, Conseco didn't establish any reserves for possible losses with respect to those claims, the company said in its 10-Q. "The insurers have denied coverage for those claims, so we commenced a lawsuit against them on June 13, 2001, in Marion County Circuit Court in Indianapolis," Conseco said.

Named as defendants are National Union Fire Insurance Company of Pittsburgh, a subsidiary of American International Group Inc., Royal Insurance Company of America, a unit of Royal & Sun Alliance; Westchester Fire Insurance Co., a unit of Ace Ltd.; RLI Insurance; Greenwich Insurance Co., a unit of XL Capital Ltd., and HSBC Insurance Brokers Ltd.

Morgan Stanley analyst Alice Schroeder, in an Aug. 31 property/casualty insurance briefing, wrote that she doesn't believe an unfavorable outcome for the defendants would have a material impact on the earnings of AIG, XL or Ace.

Schroeder said in her report that AIG's National Union Fire "was apparently the primary carrier issuing the policy, which carries limits of $10 million."

"With jury awards rising at a rapid pace, insurers are getting tougher to protect against larger losses--whether they succeed remains to be seen," Schroeder said in her report. "This event also confirms our view that the D&O market remains difficult, and prices must continue to rise."...

~ ~ ~

September 19, 2001

AIG Chairman Makes Plea

The Honolulu Advertiser

American International Group Inc. chief executive Maurice “Hank” Greenberg wants the government to help hold down damage claims from the World Trade Center attack, according to a report by Morgan Stanley Dean Witter & Co. analyst Alice Schroeder.

AIG, the biggest insurer, has said its claims from last week’s attack would be about $500 million, and Schroeder said the cost may reach $800 million.

Greenberg, 76, who has run AIG since 1967, hopes to forestall litigation from the attack that destroyed the World Trade Center, which may increase insurers’ costs and delay paying claims, Schroeder’s report says.

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February 28, 2003

TERRIFYING INSURANCE
AND A BIAS FOR AUTISM

From The Wilderness

In late November of 2002, Congress also passed a Terrorism Insurance Bill. It became a law that, in the event of a major terrorist attack, insurance companies will not have to bear the burden.

The U.S. taxpayer will.

And these megalithic giants like AIG will have to sustain only five million dollars in losses before the Treasury steps in to carry up to 90% of the remaining burden up to $100 billion. Five million dollars is a drop in the bucket for a company like AIG (the world’s largest insurance company), which had more than $5 billion in profits in 2001.

From what we have seen above, that money will have to come out of Social Security, Medicare, Medicaid, your pension or the money that should have gone to pave the roads in your neighborhood....

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February 4, 2003

Stocks Slammed by AIG Woes, War Jitters

By Elizabeth Lazarowitz, Reuters

NEW YORK - Stocks slumped on Tuesday after American International Group Inc. (NYSE:AIG), the world's largest insurer, warned it had greatly underestimated its liabilities, further unnerving investors on edge ahead of a diplomatic meeting that could heighten the threat of war with Iraq.

War jitters sent the price of gold to a 6-year high, drove the dollar lower and pumped up oil prices a day before Secretary of State Colin Powell is scheduled to provide the U.N. Security Council with evidence Washington says will show that Iraq is hiding banned weapons from U.N. arms inspectors.

"Apprehension is growing about the uncertainties of what may occur in the Middle East," said A.C. Moore, chief investment strategist at Dunvegan Associates.

"It's to be expected to see this type of volatility and softness until, perhaps, a successful outcome is obtained."

Worries about the foggy corporate profit outlook were reignited after AIG announced a massive charge of $1.8 billion to cover liability claims that have built up in recent years. AIG sank more than 6 percent and pulled other insurers down.

"AIG is more than a bellwether. It's a reflection of where the global economy is, and for them to say they have balance sheet problems, it calls into question valuations everywhere," said John Gillette, ADR trader at investment firm Lazard Freres.

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February 4, 2003

AIG stock falls 10 pct after
$1.8 billion charge

By Bill Rigby, Reuters

NEW YORK, Feb 4 (Reuters) - American International Group Inc. (AIG) sent shock waves across the world insurance industry on Tuesday, as it admitted it had drastically underestimated U.S. liability claims on its books.

AIG, the world's largest insurer, is to take a $1.8 billion charge to pay for heavier-than-expected workers compensation and executives' liability claims, which have built up over the past few years.

It blamed U.S. courts handing over large awards and a spike in shareholder lawsuits from corporate scandals such as Enron Corp. and WorldCom Inc. AIG Chief Executive Maurice Greenberg suggested other insurers were suffering from the same problems.

The hit on an insurer known for high premiums and keeping a tight rein on claims surprised investors.

AIG's shares fell as much as 10 percent in early trading, recovering slightly in the afternoon. Shares of rivals ACE Ltd. (ACE), Travelers Property Casualty Corp. (TAPa) and Chubb Corp. (CB) -- which also announced a small reserve addition on Tuesday -- all fell sharply.

"We believed that the reserve cushion AIG had built up in the 1990s would allow the company to avoid a big, one-time charge," said Merrill Lynch analyst Jay Cohen. "Clearly, the dramatic liability trends overwhelmed AIG's ability to manage this issue over time."

AIG's Greenberg, the world's leading voice on insurance issues, blamed an unpredictable surge in claims for the hole in its reserves.

"It's very difficult in some of these (liability) classes of business to predict the price you are charging one day and whether that is going to be adequate in a couple of years," he told an analyst conference call.

"It was very hard to predict it would explode the way it did," he said, citing the corporate scandals that led to shareholder lawsuits and payouts on directors' and officers' liability policies, known as D&O policies, which pay executives' legal expenses and settlements when a company is sued.

Suits against executives have soared in the past few years as bitter shareholders look to claw back money they lost on crumbling stocks.

Greenberg suggested other insurers will have to grapple with the same issues. "The things that we've done certainly affect everyone," he said, raising the specter of large reserve charges by other insurers.

European insurers and reinsurers with exposure to U.S. risks also fell hard, with Germany's Munich Re and Allianz AG and Switzerland's Zurich Financial Services all falling more than 5 percent.

AIG's stock closed down fell $3.63, or 6.5 percent, at $51.70 on the New York Stock Exchange, where it was the most heavily traded stock, with almost 19 million shares changing hands. The shares are down more than 51 percent from all-time highs around $103 at the end of 2000.

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September 13, 2002

COLI LAWSUITS

From Financial E-News

Wal-Mart has sued AIG and Hartford to get back $150 million it says it lost through corporate owned life insurance (COLI) policies for employees.

Wal-Mart charges that the insurers did not warn them sufficiently of the risks of the plans, and the effects of new tax laws.

Since more than half of Fortune 500 firms have COLI plans, this could open the door to a flood of lawsuits against other life insurers...oh joy!

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Maurice “Hank” Greenberg is expected to testify regarding American International Group’s alleged practices of bribery, bid rigging, over-charging, kickbacks, and other wrongful acts, in an alleged conspiracy with AIG, Ace, Allied World Assurance, Chubb Group, PricewaterhouseCoopers, XL, Zurich and other insurance, accounting, and financial entities.