AIG Fraud Case: Using the Market To Set Jail Terms

In coming weeks, five former insurance executives, including General Reinsurance ex-CEO Ronald Ferguson, are due to appear in federal court in Hartford. There, U.S. District Judge Christopher F. Droney will sentence them for their role in a sham transaction to boost the loss reserves of American International Group (NYSE:AIG - News). When the deal was disclosed in 2005, prosecutors contend, it caused AIG's share price to drop 6% to 15%. Because of that, the defendants, who were convicted of fraud in February, could go to prison for life.

While the case involves events that seem far removed from the present financial crisis, it highlights an issue that's sure to be front and center if prosecutors seek retribution for the market losses of recent weeks. Under federal guidelines, the base-level sentence for someone convicted of securities fraud is zero to six months. But a variety of factors can increase time behind bars -- including the size of shareholder losses, the number of victims, and whether a defendant is an officer or director at a public company. In reaction to the implosion of Enron, WorldCom, and other scandals that cost investors billions, lawmakers sharply raised the potential penalties in 2003. Now, instead of a few years in prison, fraud that results in stock losses exceeding $400 million could earn a defendant a life term.

Comments

[PT6]

TECHNOLOGY CAN SPUR THE ECONOMY, REMOVE CORRUPTION, AND AVOID MORE BAILOUTS!

FIVE KEY FACTS:

1. American Taxpayers Own Fannie, Freddie, and a group of Banks!
2. Mortgage Companies and Banks were at The CENTER of the Housing and Financial CRISIS!
3. Crisis Continues Because Homeowners can not Afford TRICKY Loans and are Walking Away!
4. The Current FED RATE is 1.5%!
5. Technology and the Internet are Sophisticated Tools for Automating Loans!

Why not use the Internet and the New Taxpayer Owned Banks to provide direct low cost loans using Automation while Eliminating the Corrupt Middle Men (i.e., Mortgage Companies and Banks)?

The rate on the new loans would be 2.5% to 3% to provide the New Taxpayer Owned Banks with a 1% to 1.5% margin!

Automation can be used to verify employment, verify home title, check credit, and do 98% of the loan Preparation. This eliminates all the mortgage fees, all bank fees, all title fees, most verification fees, and most documentation work done via internet and technology.

This could easily be accomplished using today's technology at a much LOWER COST!

The Savings for AMERICANS will spur the Economy more than any added Bailout Plans

The Savings can be used to paying debts, buy American Cars, buy American Real Estate, and all kinds of American goods plus help other countries in crisis by buying their goods!

[davkaman]

Strongly recommended: "After W., Le Deluge,"--Maureen Dowd's article in today's (Oct 19) NY Times. Yet another story about post-bailout AIG execs enjoying a lavish hunting outing at a British counry manor to the tune of $86,000. AIG's exec Sebastian Preil told an undercover reporter, "The recession will go on until about 2011, but the shooting was great today and we are relaxing fine." More such stories in Dowd's article.
These people need to be compelled to give back taxpayer's money. They need to be 'outed" - widely and repeatedly. And, if possible, they need to be punished. Spread this story around. Keep spreading it. "Wanted" posters might be a good way to start.

[LynnW49]

"Now, instead of a few years in prison, fraud that results in stock losses exceeding $400 million could earn a defendant a life term."

Sounds right to me.

[wolfgangmo]

I think that the loss of one retirement fund should be grounds for flogging.

Just sayin.

[proreality]

Jail terms are a slap on the wrist when you know you'll still be rich and connected when you get out. What's life after good behavior? how about this?

All those convicted of fraud will be forced to give up all wealth and work the rest of their lives for minimum wage. How much satisfaction would it be for an American to be asked by one of these fraudsters "would you like fry's with that?"

[LynnW49]

Even better. Looks like the perfect use of RICO to me.

"Under RICO (Racketeer Influenced and Corrupt Organizations Ac), a person who is a member of an enterprise that has committed any two of 35 crimes"27 federal crimes and 8 state crimes"within a 10-year period can be charged with racketeering. Those found guilty of racketeering can be fined up to $25,000 and/or sentenced to 20 years in prison per racketeering count. In addition, the racketeer must forfeit all ill-gotten gains and interest in any business gained through a pattern of "racketeering activity." RICO also permits a private individual harmed by the actions of such an enterprise to file a civil suit; if successful, the individual can collect treble damages." (Wikipedia)

[rapriffmaster]

Don't they give you the chair for treason?

[Mormon4Truth]

I think that the jail terms should be relative...such as you have to stay in jail until the stock returns to the trading price on the day the fraud was perpetrated. So until the stock price increases back up to $60/share, you have to stay in jail.

[Haditup2here]

No, it needs to be ten years minimum. No IFS, ANDS, or BUTS.

[schatsie]

I am definitely against the death sentence EXCEPT for Kenny Lay.. well not just Kenny Lay... Anyone who has perpetrated a fraud of 400 million has absolutely ruined lives, and the results would include bankrupcies and foreclosures, physical and mental abuse, divorce and family breakups, and suicides and health agravations and resulting deaths.... So based on that, I would be willing to push the button for anyone who was guilty or even responsibile for fraud of 400 million (and don't give me that crap about 'intent to defraud'.....)

[JuniorNorman]

I was a financial analyst in my previous career and investigated/audited/rated Fortune 500 firms. Take a look at AIG's subsidiaries and you will find two common denominators. Many of these subsidiaries have the name AIG BAKER or AIG CHELSEA. Baker, as in James Baker, attorney for the Bush family, former Secretary of State. And Chelsea? Do I need to expand?
google aig chelsea
United States of America " It can now be reported that the United States Joint Chiefs of Staff ordered the Federal Bureau of Investigation (FBI) to begin a criminal investigation of Freddie Mac, Fannie Mae, Lehman Brothers and American International Group Inc. (AIG).
This investigation was triggered when high level Admirals in the U.S. Navy became aware of "smoking gun" evidence of SECRET offshore accounts established for the members of the Bush-Clinton Crime Family Syndicate.
Evidence is now available showing American International Group Inc.(AIG) and mega Mossad Maurice (Hank) Greenberg conspired with former Federal Reserve Chairman Alan Greenspan to m...

[DrVeruju]

These reports

http://www.worldreports.org/news

are not so far-fetched after all. Storey has been in the financial reporting business for 40 years and predicted this crisis a couple of years ago.

[Halsey]

Must investigage..is all that TRUE...I believe (thinki)..that clinton (bill) is now in Carlyle group..but could be wrong.. I KNOW Gen. Colin Powell is...making his proposed endorsement of obama..and two-edged sword...who ARE these Kingmakers?.... off with their perverbial head...and by that..I mean..take ALL the money they've made in this debacle..and just apply it directly to the tax payer bail out....it may be a small pittance...but well worth it...IF ALL these guys end up in the poor house...

And..just like say..Charles Manson, can't make money from writing a book about the Tate et al murdres...any "revenue" (and I'm not saying profits..as those can be manipulated)....from books..speaking tours, etc...all of it goes to the debt....(oh..AND they go to prison..10 years sounds good)

[ReasonIsMyReligion]

Cherchez les guillotines.

[wolfgangmo]

Oui!