[Posted by Karl]
Yesterday’s Washington Times broke the story about AIG executives and their spouses being squeezed for donations to Sen. Chris Dodd (D-CT). But who did the squeezing?
The message in the Nov. 17, 2006, e-mail from Joseph Cassano, AIG Financial Products chief executive, was unmistakable: Mr. Dodd was “next in line” to be chairman of the Senate Banking, Housing and Urban Affairs Committee, which oversees the insurance industry, and he would “have the opportunity to set the committee’s agenda on issues critical to the financial services industry.”
Mr. Dodd’s campaign quickly hit pay dirt, collecting more than $160,000 from employees and their spouses at the AIG Financial Products division (AIG-FP) in Wilton, Conn., in the days before he took over as the committee chairman in January 2007. Months later, the senator transferred the donations to jump-start his 2008 presidential bid, which later failed.
Ed Morrissey thought the Federal Election Commission might want to investigate whether those donations were reimbursed.
Guess what? Cassano has bigger problems than the FEC:
The FBI and federal prosecutors are reportedly closing in on the AIG executive whose suspect investments cost the insurance giant hundreds of billions of dollars. The government is investigating whether or not 54-year old Brooklyn-native Joseph Cassano committed criminal fraud in virtually bankrupting the company.
“He almost single-handedly is responsible for bringing AIG down and by reference the economy of this country,” said Rep. Jackie Speier (D-Ca.)
“AIG was insuring junk and it was the AIG insurance that made the junk marketable,” said tax law expert Jack Blum. “American taxpayers have been put on the hook for this insurance junk.”
Even as the bad loans began to emerge, Cassano boasted to Wall Street analysts that his transactions, called credit default swaps, were foolproof.
An ABC News investigation found that Cassano set up some dozens of separate companies, some off-shore, to handle the transactions, effectively keeping them off the books of AIG and out of sight of regulators in the U.S. and the United Kingdom.
”This is the other very important issue underneath the AIG scandal,” said Blum. “All of these contracts were moved offshore for the express purpose of getting out from under regulation and tax evasion.”
But wait… there’s more! AIG-FP’s internal auditor, Joseph St. Denis, alleges that Cassano deliberately thwarted St. Denis’ effort to do his job, reminding some of the Enron and WorldCom cases. TPM Muckraker has a handy Cassano timeline with further details. Cassano is based in London, but AIG-FP is reportedly under investigation by Britain’s Serious Fraud Office in addition to the FBI and Congress. And at least one of the execs whose bonuses sparked the populist rage of the past few weeks was assisting in the investigation.
One thing we learned from the AIG bonus furor is that those populists are not very discriminating in their rage. Consequently, the fact that 84% of AIG-FP donations went to the Democrats and that Dodd has a habit of legislating windfalls for the insurance industry at taxpayer expense suggests that Cassano was not the only one having a bad day yesterday.