The Smoking Gun: AIG, Corporate Ponzi Schemes, Sham Reinsurance and Denial. Consumers raped by sham reinsurance contracts.
This story is very fluid and rapidly gaining traction. In a nutshell Thomas Gober is absolutely right that AIG was a scam – for years! The real question is extent as this goes beyond just AIG as we’re relatively certain State Farm has similar problems as evidenced by their tangled corporate structure and nefarious connections to offshore Bermudan reinsurers. From the The Institutional Risk Analyst as we expand on Russell’s original post:
In fact, our investigation suggests that by the time AIG had entered the CDS fray in a serious way more than five years ago, the firm was already doomed. No longer able to prop up its earnings using reinsurance because of growing scrutiny from state insurance regulators and federal law enforcement agencies, AIG’s foray into CDS was really the grand finale. AIG was a Ponzi scheme plain and simple, yet the Obama Administration still thinks of AIG as a real company that simply took excessive risks. No, to us what the fraud Bernard Madoff is to individual investors, AIG is to the global financial community.
As with the phony reinsurance contracts that AIG and other insurers wrote for decades, when AIG wrote hundreds of billions of dollars in CDS contracts, neither AIG nor the counterparties believed that the CDS would ever be paid. Indeed, one source with personal knowledge of the matter suggests that there may be emails and actual side letters between AIG and its counterparties that could prove conclusively that AIG never intended to pay out on any of its CDS contracts.
The significance of this for the US bailout of AIG is profound. If our surmise is correct, the position of Feb Chairman Ben Bernanke and Treasury Secretary Tim Geithner that the AIG credit default contracts are “valid legal contracts” is ridiculous and reveals a level of ignorance by the Fed and Treasury about the true goings on inside AIG and the reinsurance industry that is truly staggering. Continue reading “Barack Obama You’ve Been Punked. AIG is a Massive Financial Fraud. Citizen Bloggers close in for the k(r)ill”
Song Jimmie Rodgers
Lyrics by Sop81_1
Performed by: Maurice “Hank” Greenberg, Ronald E. Ferguson, Robert D. Graham and Christopher P. Garand, and Christian M. Milton
Special Guest Yodelers: Warren Buffet, Tim Balducci, Steve Patterson, Joey Langston and Dick Scruggs
I had a friend named Ramblin’ Ron
Who used to steal gamble and rob
He thought he was the smartest guy in town
But I found out last Monday
That Ron got locked up Sunday
They’ve got him in the jailhouse way down town
He’s in the jailhouse now he’s in the jailhouse now
I told him once or twice quit playin’ cards and shootin’ dice
He’s in the jailhouse now Continue reading “Oh Insurer Where Art Thou Part 5: In the Jailhouse Now”
Come gather ’round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You’ll be drenched to the bone.
If your time to you
Is worth savin’
Then you better start swimmin’
Or you’ll sink like a stone
For the times they are a-changin’.
Put your Dylan on and let’s begin at Berkshire Hathaway subsidiary General Re (not that the reader would know that from the story):
Convicted former Gen Re executive Christopher P. Garand was sentenced to serve a year and a day in prison on his conviction of being involved in a scheme to manipulate American International Group’s financial statement.
In addition to his prison sentence, the former senior vice president and assistant general counsel also was sentenced today to serve two years of supervised release and pay a $150,000 fine by Federal District Court Judge Christopher F. Droney, sitting in Hartford, Conn.
Mr. Garand, along with four others, was convicted in February 2008 of 16 counts that included conspiracy, securities fraud, making false statements to the Securities and Exchange Commission, and mail fraud.
The five executives were convicted of a scheme between General Re Corp. and AIG to inflate AIG’s earnings with two sham reinsurance transactions. The deal increased AIG’s loss reserves by $250 million in the fourth quarter of 2000 and $250 million in the first quarter of 2001, masking declines in loss reserves.
After investigators uncovered the activity, AIG restated its earnings, costing shareholders more than $500 million. Continue reading “A Weeks Worth of National Underwriter Breaking News at the Do Slabb Inn: Special Warren Edition”