DOJ will not bring charges against AIG Head (NYT)

Case Said to Conclude Against Head of A.I.G. Unit
May 24, 2010, 2:45 am

Federal prosecutors investigating the events leading up to the collapse of the American International Group in 2008 will not bring charges against Joseph Cassano, the chief executive of the unit that insured mortgage-related securities with calamitous results, according to two people briefed on the matter, Gretchen Morgenson reports in The New York Times.

Mr. Cassano and other executives at A.I.G.’s Financial Products unit, which had insured almost $80 billion in mortgage-related securities, came under scrutiny by the Department of Justice after the insurer failed in September 2008. Investigators were examining whether Mr. Cassano misled investors when he stated in December 2007 that the company’s obligations on the mortgage securities it backed were unlikely to produce losses.

The Federal Reserve Bank of New York and the United States Treasury rescued A.I.G. with a taxpayer backstop totaling $180 billion.

The people briefed on the decision not to bring charges spoke on condition of anonymity because they were not authorized to speak publicly on the matter.

F. Joseph Warin, Mr. Cassano’s lawyer, said in a statement: “Although a two-year, intense investigation is tough for anyone, the results are wholly appropriate in light of our client’s factual innocence.”

Lawyers for another A.I.G. executive who was a target of the investigation, Andrew Forster, said in a statement that their client had been cleared as well. “We were very pleased but not surprised to hear,” said the lawyers, David M. Brodsky and Richard D. Owens, of Latham & Watkins, “that they were dropping the criminal investigation of our client Andrew Forster,” adding, “In the end, the facts were stronger than the emotions surrounding A.I.G.’s problems.”