The former CEO of AIG, Maurice Greenberg, testified in his fraud trial in a New York City courthouse on Sept. 29. It was Greenberg’s second day of testimony in his defense.
The trial concerns two allegedly fraudulent transactions that the government alleges were made in order to inflate AIG’s reserves and cover up losses. One was a $500 million transaction that was allegedly made to inflate the reserves while the other was a $200 million transaction that was allegedly made to cover up losses. The losses were reportedly from the company’s auto warranty program. Greenberg reportedly invested the $200 million in an offshore investment vehicle called Capco so that he could count the money as investment losses rather than as underwriting losses.
Greenberg testified that he would not have moved forward if the company’s accountants and lawyers had not signed off on the transactions. The prosecutor asked him on cross-examination if anyone had asked an accountant or an attorney about whether or not the transactions were legal. Greenberg reportedly answered that he did not know. The prosecutors are seeking to bar Greenberg for life from serving as the head of a company or dealing with securities. They are also asking for him to pay back $50 million in bonuses that he received while he was at AIG. He was forced out of the company in 2005.
People who are under investigation for fraud often learn about it well in advance of charges actually being filed. They may find it advisable to obtain the representation of a criminal defense attorney as soon as possible so that a strategy to combat the allegations can be developed in advance.
Source: Reuters, “AIG’s ex-CEO Greenberg cites lawyers, accountants in fraud defense,” Karen Freifeld, Sept. 29, 2016.
