Occupational Fraud Reported at AIG |
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Back in September, American International Group, Inc. (AIG) made headlines when the U.S. Government agreed to an $85 billion loan to help bailout the financial giant. Recently, AIG was again in the news as one of its former executives was convicted, along with four former executives of General Re Corp of perpetrating a financial statement fraud that cost investors in excess of $500 million. The fraudulent financial statements case is not related to the bailout.
Prosecutors charged the five former executives with creating a plan back in 2000 which allowed AIG to report inflated reserves and caused the overvaluation of the company. They further charged that when the fraud became known, the stock price tumbled, resulting in investor losses, which the prosecution estimated to be as high as $1.4 billion. The five were convicted earlier this year and a federal judge ruled on November 3, 2008 that investor losses were approximately $550 million. Because of the size of the loss and the number of people affected, under federal sentencing guidelines the five could be sentenced to as much as 20 years in prison. [Source A] [Source B]
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