CV05-00030 - U.S. Dept of Justice, Office of the U.S. Trustee, David C. Farmer, Trustee vs. Harmon

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

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DEFENDANT’S WITNESS

EDWARD M. LIDDY

From wikipedia:

Edward M. Liddy (born January 28, 1946) is currently the chief executive officer of American International Group (AIG), where he succeeded Robert B. Willumstad in June, 2008.. Liddy is currently on the board of 3M and The Kroger Company. Upon taking the position of CEO at American International Group, Mr. Liddy had to resign his board position at Goldman Sachs.

He is also the former chairman, president and CEO of Allstate. Prior to Allstate, Mr. Liddy also held the position of chief financial officer of G. D. Searle & Company, where former Defense Secretary Donald Rumsfeld held the CEO position. He has recently become a partner at private equity firm Clayton, Dubilier & Rice, which he joined in 2008.

Born in New Brunswick, New Jersey, he holds a degree from Catholic University of America (1968) and holds an MBA from George Washington University (1972).

As CEO of AIG, Liddy receives a salary of $1 and equity grants....

http://en.wikipedia.org/wiki/Edward_M._Liddy

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May 21, 2009

AIG's Liddy to step down when new executives found

By EILEEN AJ CONNELLY, AP Business Writer

NEW YORK – American International Group Inc. on Thursday said its chairman and chief executive plans to step down when a search for replacements is complete.

The company also said its board agreed with a recommendation from Edward M. Liddy, who took over the insurer in September, to separate the chairman and CEO roles.

AIG will start a search for permanent leadership after the company's annual shareholder meeting June 30. At that meeting, investors will vote on a slate of six new independent directors.

Shareholders will also vote on a company proposal for a reverse stock split of the company's outstanding common stock at a ratio of 1 for 20, according to a regulatory filing.

The plan to split the chairman and CEO comes as AIG's corporate governance practices continue to receive intense scrutiny, after it paid out millions in bonuses despite a huge bailout from taxpayers.

AIG has received $182.5 billion in financial support from the government since September. As part of the loan package, the government has also taken a roughly 80 percent stake in the huge insurance company.

The company said the search for new leadership will include participation by both the reconstituted board and the trustees of the AIG Credit Facility Trust, which was established to represent government interests in the company.

Liddy, former CEO of Allstate Corp., was named chairman and chief executive on Sept. 18, in connection with the federal bailout. He succeeded Robert B. Willumstad, who was chairman since November 2006 and held the CEO spot since June.

AIG shares closed Thursday trading up 2 cents at $1.80, then lost a penny in aftermarket electronic trading.

http://news.yahoo.com/s/ap/20090521/ap_on_bi_ge/us_aig_liddy

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NEW DISCOVERY (04/17/09); More undisclosed conflicts of interest between David Farmer, Ben Cayetano, Earl Anzai, Lyn Anzai, Robin Campaniano, Edward Liddy, Goldman Sachs, Barack Obama, Henry Paulson, The Nature Conservancy, The Hawaii Chapter of The Nature Conservancy, Suzanne Case, Peter Savio, Faye Kurren, Haunani Apoliona, OHA, Robert Rubin, Kamehameha Schools, Nathan Aipa, Bishop Museum, William Simon, HonFed, Investors Equity Life Insurance Co., Bank of Hawaii, Central Pacific Bank, Colbert Matsumoto, Dan Inouye, AIG, CV Starr, Hank Greenberg, ACE Insurance, Ace Greenberg, Chubb Group, Marsh & McLennan, Rocco Sansone, Mercer Consulting, Aloha Airlines, Bill Clinton, Yucaipa, Hawaiian Airlines, Douglas Ing, Henry Peters, Judge Rey Graulty, Judge Barry Kurren, Judge Robert Faris, etc:

April 17, 2009

A.I.G. Chief Owns Significant
Stake in Goldman

By MARY WILLIAMS WALSH, New York Times

Edward M. Liddy, the dollar-a-year chief executive leading the American International Group since its bailout last fall, still owns a significant stake in Goldman Sachs, one of the insurer’s trading partners that was made whole by the government bailout of A.I.G.

Mr. Liddy earned most of his holdings in Goldman, worth more than $3 million total, as compensation for serving on the bank’s board and its audit committee until he stepped down in September to take the job at A.I.G. He moved to A.I.G. at the request of Henry M. Paulson Jr., then the Treasury secretary and a former Goldman director.

Details about his holdings were disclosed in Goldman’s proxy statement and confirmed by an A.I.G. spokeswoman, who said they constituted “a small percentage of his total net worth.” Mr. Liddy had already owned some stock in Goldman Sachs before joining its board in 2003.

He has said that he considers his work at A.I.G. to be a public service, performed on behalf of the taxpayers, who ended up with nearly 80 percent of the insurance company. His goal is to dismantle the company and sell its operating units, using the proceeds to pay back the rescue loans. On Thursday, A.I.G. said it had sold its car insurance unit, 21st Century Insurance, to the Zurich Financial Services Group for $1.9 billion.

Along the way, Mr. Liddy has clearly disclosed that A.I.G. was serving as a conduit, with much of the rescue money passing through and ending up in the hands of A.I.G.’s trading partners.

Goldman has said in the past that it had collateral and hedges to reduce the risk of its exposure to A.I.G.

Still, his stake could represent a potential conflict and is likely to reignite questions about Goldman’s involvement in A.I.G., and about why taxpayer money was used to shield A.I.G.’s trading partners from losses, when asset values plunged everywhere and most investors suffered greatly.

Had A.I.G. simply declared bankruptcy, the financial institutions doing business with it would have ended up in court, as they did in the case of Lehman Brothers, fighting to get pennies on the dollar for their claims.

Instead, Goldman Sachs received $13 billion of the Federal Reserve’s rescue money to close out various contracts it had outstanding with A.I.G. It was one of the biggest beneficiaries of the government rescue.

A spokeswoman for A.I.G., Christina Pretto, dismissed any suggestion that Mr. Liddy’s financial ties to Goldman might have shaped his actions at A.I.G.

“A.I.G. is a large institution that engages in standard commercial activity with companies all over the world,” Ms. Pretto said. “These activities are handled in the normal, day-to-day course of business and rarely, if ever, rise to the level of the C.E.O.”

She said in particular that Mr. Liddy was not involved in the discussions of how to close out the contracts of A.I.G.’s counterparties in derivatives and other forms of trading.

“Discussions regarding these matters were handled exclusively by the Federal Reserve Bank of New York,” Ms. Pretto said.

According to Goldman’s proxy, Mr. Liddy holds 18,244 units of restricted stock, which would be worth about $2.2 million if they were sold at today’s market price. The rest of his holdings are in common stock. Restricted stock cannot be sold without incurring significant tax penalties, but the proxy said that Mr. Liddy’s restricted units would be converted to common shares on May 9.

Officials at the Fed, which initiated the bailout of A.I.G. last September, have said they were not happy about having to pour public resources into private sector companies, but felt that they had to do so to avoid a chain of losses at financial institutions all over the world.

http://www.nytimes.com/2009/04/17/business/17liddy.html?_r=1&em

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March 14, 2009

A.I.G. Planning Huge Bonuses
After $170 Billion Bailout

By EDMUND L. ANDREWS and PETER BAKER, New York Times

WASHINGTON — The American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, plans to pay about $165 million in bonuses by Sunday to executives in the same business unit that brought the company to the brink of collapse last year.

Word of the bonuses last week stirred such deep consternation inside the Obama administration that Treasury Secretary Timothy F. Geithner told the firm they were unacceptable and demanded they be renegotiated, a senior administration official said.

But the bonuses will go forward because lawyers said the firm was contractually obligated to pay them.

The payments to A.I.G.’s financial products unit are in addition to $121 million in previously scheduled bonuses for the company’s senior executives and 6,400 employees across the sprawling corporation. Mr. Geithner last week pressured A.I.G. to cut the $9.6 million going to the top 50 executives in half and tie the rest to performance.

The payment of so much money at a company at the heart of the financial collapse that sent the broader economy into a tailspin almost certainly will fuel a popular backlash against the government’s efforts to prop up Wall Street. Past bonuses already have prompted President Obama and Congress to impose tough rules on corporate executive compensation at firms bailed out with taxpayer money.

A.I.G., nearly 80 percent of which is now owned by the government, defended its bonuses, arguing that they were promised last year before the crisis and cannot be legally canceled. In a letter to Mr. Geithner, Edward M. Liddy, the government-appointed chairman of A.I.G., said at least some bonuses were needed to keep the most skilled executives.

“We cannot attract and retain the best and the brightest talent to lead and staff the A.I.G. businesses — which are now being operated principally on behalf of American taxpayers — if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury,” he wrote Mr. Geithner on Saturday.

Still, Mr. Liddy seemed stung by his talk with Mr. Geithner, calling their conversation last Wednesday “a difficult one for me” and noting that he receives no bonus himself. “Needless to say, in the current circumstances,” Mr. Liddy wrote, “I do not like these arrangements and find it distasteful and difficult to recommend to you that we must proceed with them.”

An A.I.G. spokeswoman said Saturday that the company had no comment beyond the letter. The bonuses were first reported by The Washington Post.

The senior government official, who was not authorized to speak on the record, said the administration was outraged. “It is unacceptable for Wall Street firms receiving government assistance to hand out million-dollar bonuses, while hard-working Americans bear the burden of this economic crisis,” the official said.

Of all the financial institutions that have been propped up by taxpayer dollars, none has received more money than A.I.G. and none has infuriated lawmakers more with practices that policy makers have called reckless.

The bonuses will be paid to executives at A.I.G.’s financial products division, the unit that wrote trillions of dollars’ worth of credit-default swaps that protected investors from defaults on bonds backed in many cases by subprime mortgages.

The bonus plan covers 400 employees, and the bonuses range from as little as $1,000 to as much as $6.5 million. Seven executives at the financial products unit were entitled to receive more than $3 million in bonuses.

Mr. Liddy, whom Federal Reserve and Treasury officials recruited after A.I.G. faltered last September and received its first round of bailout money, said the bonuses and “retention pay” had been agreed to in early 2008 and were for the most part legally required.

The company told the Treasury that there were two categories of bonus payments, with the first to be given to senior executives. The administration official said Mr. Geithner had told A.I.G. to revise them to protect taxpayer dollars and tie future payments to performance.

The second group of bonuses covers some 2008 retention payments from contracts entered into before government involvement in A.I.G. Indeed, in his letter to Mr. Geithner, Mr. Liddy wrote that he had shown the details of the $450 million bonus pool to outside lawyers and been told that A.I.G. had no choice but to follow through with the payment schedule.

The administration official said the Treasury Department did its own legal analysis and concluded that those contracts could not be broken. The official noted that even a provision recently pushed through Congress by Senator Christopher J. Dodd, a Connecticut Democrat, had an exemption for such bonus agreements already in place.

But the official said the administration will force A.I.G. to eventually repay the cost of the bonuses to the taxpayers as part of the agreement with the firm, which is being restructured.

A.I.G. did cut other bonuses, Mr. Liddy explained, but those were part of the compensation for people who dealt in other parts of the company and had no direct involvement with the derivatives.

Mr. Liddy wrote that A.I.G. hoped to reduce its retention bonuses for 2009 by 30 percent. He said the top 25 executives at the financial products division had also agreed to reduce their salary for the rest of 2009 to $1.

Ever since it was bailed out by the government last fall, A.I.G. has been defending itself against accusations that it was richly compensating people who caused one of the biggest financial crises in American history.

A.I.G.’s main business is insurance, but the financial products unit sold hundreds of billions of dollars’ worth of derivatives, the notorious credit-default swaps that nearly toppled the entire company last fall.

A.I.G. had set up a special bonus pool for the financial products unit early in 2008, before the company’s near collapse, when problems stemming from the mortgage crisis were becoming clear and there were concerns that some of the best-informed derivatives specialists might leave. It locked in a total amount, $450 million, for the financial products unit and prepared to pay it in a series of installments, to encourage people to stay.

Only part of the payments had been made by last fall, when A.I.G. nearly collapsed. In documents provided to the Treasury, A.I.G. said it was required to pay about $165 million in bonuses on or before Sunday. That is in addition to $55 million in December.

Under a deal reached last week, A.I.G. agreed that the top 50 executives would get half of the $9.6 million they were supposed to get by March 15. The second half of their bonuses would be paid out in two installments in July and in September. To get those payments, Treasury officials said, A.I.G. would have to show that it had made progress toward its goal of selling off business units and repaying the government.

The financial products unit is now being painstakingly wound down.

http://www.nytimes.com/2009/03/15/business/15AIG.html?th&emc=th

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September 16, 2008

NIGHTMARE ON WALL STREET

Isle experts expect
wave of recession

Economists say the Wall Street crisis will likely
damage Hawaii’s delicate economy

By Kristen Consillio. kconsillio@starbulletin.com

Calling it a once-in-a-lifetime financial crisis, local finance experts expect the national market meltdown to lead to a recession in Hawaii.

"It's hard to see what could be the worst financial crisis in at least the last 50 years and have it not precipitate into something like a recession," said Neil Rose, chief investment officer of Honolulu-based Cadinha & Co. "We don't see this as a quick bottom - it's going to take some time to figure out exactly who is tied to these financial institutions."

Though far from Hawaii's shores, turmoil on Wall Street with the same-day news of Lehman Brothers Holdings Inc.'s bankruptcy, Bank of America Corp.'s acquisition of Merrill Lynch & Co. and AIG Hawaii parent American International Group Inc.'s plea for emergency funds is expected to exacerbate declining consumer confidence.

The state's lead tourism industry, already reeling from a sharp drop in visitors, is expected to spiral even further since it is tied to consumer spending and a healthy economy. Also of significant concern is the local housing market, which hinges on borrowing and financing for land development - a sector that is already struggling to make deals happen.

"We already predicted job losses for two years; that's a recession, and this can't do anything but make it worse," said Carl Bonham, an economist with the University of Hawaii Economic Research Organization. "It's bad, there's absolutely no doubt about that."

UHERO, which is set to release an updated economic forecast this week, predicted in June job losses of 0.2 percent for both 2008 and 2009.

While Hawaii has held up better than most areas on the mainland, the state is still extremely vulnerable to outside factors, evidenced by isle foreclosures, which jumped 132 percent year-over-year in August.

To some extent, Hawaii is already seeing the effects of a recession, including increased bankruptcies, the demise of longtime businesses and mass layoffs statewide, according to finance experts.

"I don't think we're going into a depression, but we'll probably have a recession; no doubt about that," said Richard Dole, chief executive of Honolulu-based Dole Capital LLC, a specialty private equity investment banking firm.

"It's really a crisis of confidence," he said. "If people don't have a lot of confidence on the mainland, they're certainly not coming here. Foreign markets are suffering, too."

Paul Brewbaker, Bank of Hawaii's chief economist, said isle consumers should not worry too much about the upheaval among some of Wall Street's largest players.

"The losses in this kind of financial market turbulence are not the kind of things that retail consumers are exposed to, unless they're shareholders," Brewbaker said. "The thing to remember is that the capital markets, as a whole, are secure, although a number of firms have experienced losses severe enough to put them out of business."

Some investors are concerned that AIG's problems could spill over to other companies that do business with the firm.

"The way we look at it is, as far as we know, the insurance side of our operation is fine," said Robin Campaniano, president and chief executive officer of AIG Hawaii, which wrote nearly $120 million in premiums for fiscal 2008. "The nature of our problems have less to do with the performance of our insurance portfolio than the credit and the real estate markets."

http://starbulletin.com/2008/09/16/news/story01.html

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

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NEW DISCOVERY (09-16-08):

Googling for...

AIG and
The Philippine Connection

www.kycbs.net/Google-AIG-PI.htm

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NEW DISCOVERY (04-22-08): David Farmer’s undisclosed connections with AIPAC and “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 AIPAC. Each underlined name has been linked to a detailed description of that witness to enable the Court to more easily CONNECT THE DOTS TO...

AIPAC

Investors Equity Insurance Company

Reliance Insurance Group