Feds want to block AIG report
NEW YORK (Reuters) ? A federal prosecutor will seek to halt the release of an American International Group Inc. report that uncovered accounting fraud at the insurer, fearing it could undermine his case, according to a letter sent this week to the court reviewing the case.
The report, written last spring by AIG?s attorneys, was given to New York Attorney General Eliot Spitzer, who then filed a civil suit accusing former AIG Chairman Maurice (Hank) Greenberg of engineering fraudulent transactions to boost AIG?s stock price.
New York State Supreme Court Justice Charles Ramos earlier this week gave AIG until March 6 to turn over the report to Greenberg, who was ousted from the company last March.
Greenberg wants to see the AIG report as part of the discovery process to defend himself against Spitzer?s charges.
But Paul McNulty, US Attorney for the eastern district of Virginia, said releasing the report could be detrimental to the US Justice Department?s case against one former AIG executive and three former Berkshire Hathaway Inc. executives and will challenge the order.
?Allowing defendant Greenberg to proceed with his requested discovery may have an adverse impact on the United States in the criminal proceedings,? he wrote in a letter to New York State Supreme Court Justice Charles Ramos.
McNulty?s letter says his office will intervene by the end of this week and ask the court to stop the release of that report to keep testimony and documents related to his criminal prosecution of the four former insurance executives from being used at the Virginia trial.
AIG spokesman Chris Winans and Managing Assistant US Attorney Kathleen Kahoe declined to comment on the letter. Brooke Parker, a spokeswoman for Greenberg, confirmed the contents of the letter.
In addition to the former AIG head of reinsurance Christian Milton, the Virginia suit charges three former officers of the reinsurance unit of Warren Buffett?s Berkshire Hathaway in a $500 million accounting fraud that pumped up AIG?s reserves.
In February, the four pleaded not guilty to 13 criminal counts of conspiracy, fraud and making false statements for their alleged roles in the book-cooking scheme. Their trial is expected to start in May and continue into June, McNulty said in the letter.
The three former officers of Berkshire?s General Re unit are ex-Chief Executive Officer Ronald Ferguson, ex-Chief Financial Officer Elizabeth Monrad and ex-Assistant General Counsel Robert Graham.
AIG has admitted in its internal report that it accounted for the reserve deal improperly and has restated $3.5 billion of earnings over five years. It paid $1.64 billion to settle charges with federal and New York state officials.
The indictment against the four referred to a November 14, 2000, telephone conversation in which Monrad allegedly told Houldsworth the dealings under scrutiny were ?being handled at the highest levels in AIG? and that two people at AIG who knew about the dealings were Milton and ?AIG unindicted co-conspirator 1?.
