More Musings on Stealing Big

Yesterday I wrote about the Matt Taibbi article in Rolling Stone that details how Joe Cassano, former head of AIG Financial Products, got away with what would appear to be serious financial misrepresentations without ever being criminally charged. In my blog piece, I noted that AIG's actual insurance operations had always been profitable.

Today, I was reading through the original 2007 federal civil complaint that NCCI (National Council on Compensation Insuance) filed against AIG on behalf of all the other insurance companies that write Workers' Comp insurance in the U.S. That lawsuit sought one billion dollars in damages, and made detailed allegations that AIG had, for decades, lied about how much Workers' Comp insurance it actually wrote, so that it could dodge out of AIG's fair share of Assigned Risk losses and assessments.

That lawsuit, by the way, was recently settled by AIG. In a settlement with all Workers' Comp insurers except Liberty Mutual, AIG has agreed to pay $450 million dollars. Liberty is still pursuing separate legal action against AIG. And that $450 million is on top of $146 million paid by AIG to state regulators last December over the same improprieties, and $750 million AIG agreed to pay investors for financial improprieties, and then the $330 million AIG paid way back when as a settlement to New York state when Eliot Spitzer first figured out how the insurer was playing fast and loose. It's little wonder a federal judge once characterized AIG as having been run as a "criminal enterprise."

Here's the thing: the Matt Taibbi story asked why Cassano and some other titans of finance aren't doing time, or at the least aren't busily defending themselves against criminal charges. And reading this complaint by NCCI against AIG, I am left with a similar question: why the hell isn't Maurice "Hank" Greenberg sitting in a cell next to Bernie Madoff?

Or at the very least, why hasn't this man faced a criminal prosecution for the misdeeds that he reportedly instigated and oversaw at AIG for decades?

The NCCI complaint quotes extensively from internal AIG reports and investigations that state that Greenbert knew all about these schemes, and that he in fact insisted that they be carried out. So (if the NCCI and the internal AIG reports were right) it would appear that Mr. Greenberg presided over a billion dollar, decades-long scheme of financial fraud, and yet has never had to answer for this.

Sometimes the inconsistent enforcement of our laws can be a little depressing. I've served as an expert witness in two federal criminal trials, where individuals allegedly profited far, far less than Mr. Greenbert allegedly did. Those individuals ended up serving time in the federal penitentiary. And in one of those cases, I remain convinced to this day that the federal prosecutor managed to convict entirely innocent people.

If you're going to steal, steal big.