Insufficient Evidence to Bring Criminal Charges Against AIG Execs
According to federal prosecutors, they have found insufficient evidence
to bring criminal charges against American International Group (AIG) former
Joseph Cassano, the former head of AIG’s London-based Financial Products unit, has been accused by the media of being a major cause in the worsening of the financial crisis. He had also been the central focus of a two-year FBI investigation into potential securities fraud. However, Mr. Cassano wasn’t charged because federal prosecutors were not able to find enough evidence to substantiate criminal intent in the company’s accounting practices, according to an AIG Financial Products executive.
During Mr. Cassano’s time at the company, AIG Financial Products wrote billions of dollars in credit default swaps, which are insurance-like contracts. This amount included swap protection for securities backed by home loans with marginally qualified borrowers.
When the housing market started to decline in 2007, many of the major investment houses ordered that AIG Financial Products pay billions of dollars to cover the drops in value. In September 2008, AIG was almost pushed into bankruptcy as the demands continued to grow. The company eventually received bailout money from the government.
Some believe that Mr. Cassano signed off on contracts that the company couldn’t cover in an economic disaster. This particular investigation, though, was focused on whether the executives at AIG Financial Products misled investors.