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AIG SCANDAL
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AIG SCANDAL
Occurred in 2005
By: Stephanie Alvarez, Eduardo Anaya, Laine Biagi, Jorge Cantoran, Mireya Castelan
Who Was Involved?
CEO of AIG: Hank Greenburg
American Insurance Group Background
AIG Information:
- V.P. in 1960
- Elected Director in 1965
-President and Chief Executive in 1968
-Chairman and Chief Executive in 2005
-Retired in 2005
CEO of Gen. Re:
Ron Ferguson
Gen. Re Chief Financial Officer:
Elizabeth A. Monrad
In 2008, the defendants were convicted on all 16 charges, including conspiracy, securities fraud, mail fraud and lying to the Securities and Exchange Commission.
In May 2010, the US Department of Justice (DOJ) decided not to file criminal charges against American International Group (AIG)
In 2011, the court of appeals threw out the criminal conviction of the General Re. employees.
No one served jail time for this financial fraud.
What Happened?
- American International Group was founded in 1919 by Cornelius Vander Starr
-AIG is a provider of property
casualty insurance, life insurance, retirement services, and mortgage
insurance
-AIG serves customers in over 130 countries
False accounting records mislead its investors into believing the company had a significantly better perfor-
mance rating than it really did.
-Hid losses i financial statements
-Didn't record deferred acquisition costs in a
timely manner
-Paid insurance brokers to steer business to
AIG
-Used collateral to buy mortgage backed securities
The SEC accused AIG of intentional
reckless structuring of transaction hav-
ing no economic substance, that were designed only for illegal purpose of
positively affecting AIG financial state-
ments.
Where? When?
New York, April 10, 2005
Loss and Bailout?
American Insurance Group Now
How long did it last?
The AIG scandal lasted from 2000-2005
- AIG used $182 billion in tax payers money to be bailed out of debt.
- In the 4th quarter, they
had a $61.7 billion loss.
AIG is now trying to rebuild their business so they can eventually sell it to China after they rebuild it to a point where it is to big to fail. The company is looking at purchasing mortgages as investment vehicles.