Archive | stipulations

Saturday, August 13th, 2011

Insurance [Snow] Job

United States v. Ferguson, No. 08-6211-cr (2d Cir. August 1, 2011) (Jacobs, Kearse, Straub, CJJ)

For 3Q of 2000, the insurer AIG’s stock price dropped significantly, even though its earnings were satisfactory. The company concluded that the cause was a $59 million decline in its loss reserves – a measure of the company’s risk exposure.

In the true spirit of 21st Century American business ingenuity – the same, it seems, that caused the company to all but collapse entirely, and require a $90 billion government bailout, in 2008 – AIG, or at least some of its principals, decided that the best course would be – rather than actually increasing its loss reserves and satisfying its stockholders – to engage in an accounting fraud. The company accordingly entered into a sham reinsurance contract with General Re. The deal was structured to look – to AIG’s investors and auditors – like it …

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Categories: stipulations, Uncategorized, willful causation

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