ex-CEO Ronald Ferguson and ex-CFO Elizabeth Monrad — and one worked at AIG.

Five former insurance company executives were convicted today in Hartford, Conn., for deceiving American International Group investors back in 2000, Four led General Reinsurance Corp. — including ex-CEO Ronald Ferguson and ex-CFO Elizabeth Monrad — and one worked at AIG. A federal jury found all five guilty of fraud for a bogus stock transaction that helped AIG add $500 million in phony loss reserves, a key indicator of an insurer's health."This case is about truth, a choice to lie and deception to cover it up,'' Assistant U.S. Attorney Raymond Patricco told jurors in closing arguments. "These five defendants made the choice to lie to AIG's investors and to deprive them of the opportunity to make informed decisions about their stock.'' (Here's the Justice Department's press release.) All could...

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Posted in: Corporate Fraud Task Force

Britons involved in tax fraud British government's tax agency said on Monday it too had paid for information on secret Liechtenstein b

A massive tax evasion scandal in Germany has spilled over to other parts of Europe as Berlin vowed to share information on alleged tax evasion centering on Liechtenstein with countries whose nationals may be implicated.Widening the scope of what is already a massive scandal involving hundreds of wealthy German tax cheats sheltering millions in discreet bank accounts in Liechtenstein, the German government said on Monday, Feb. 25, it would provide information to foreign countries whose nationals are involved in the tax evasion affair. "We are going to respond to requests in this regard," German finance ministry spokesman, Thorsten Albig told reporters, adding that Germany would not charge foreign governments for the information. Scandinavians, Britons involved in tax affair? Germany's intelligence...

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Posted in: Liechtenstein

hyper-complex credit bubble

hyper-complex credit bubble affecting a dizzying array of little-known but somehow completely intertwined components. No wonder the coverage has been as inconsistent and spotty as, well, the auction-rate market.The auction-rate market? What's that?Really, how many financial journalists knew what the auction-rate market was-or that it even existed-until a few weeks ago? Or a SIV, for that matter? Or a conduit? Or a credit-default swap? Or even bond insurance? This is normally dense, difficult, unglamourous stuff. So we're left with a, well, strange situation. Thanks to the blogosphere, never before has so much media pantingly followed finance. But never before has the media produced so little real information on such a big event. Ask yourself: has any one outlet, online or otherwise, emerged...

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Posted in: hyper-complex credit bubble

Major corruption scandal in the European Union

Last year, three Italian nationals, including a civil servant working for the European Commission were charged with forgery, corruption fraud and forming a criminal organization. In what could become a major corruption scandal in the European Union, a confidential report by the European Parliament's internal auditors says that some of the 784 members of parliament (MEPs) were employing family members while others had registered payments to firms which did not exist.The demand for an investigation was made by Charles Davies, a member of the UK Liberal Democrat party and the parliament's budget control committee. Davies, who was among a handful...

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Posted in: Scandal in the European Union

Unwinding of CDOs

``The market is full of rumors of unwinding of CDOs, and the price action suggests that people believe the rumors,'' said Peter Duenas-Brckovitch, head of European credit trading at Lehman Brothers Holdings Inc. in London. ``It sort of has that Armageddon feel, and the market is feeding on itself.'' Everyone knows that homeowners insurance is designed to insure against fires and floods but few are familiar with credit default swaps, arcane financial instruments invented by Wall Street about ten years ago. Credit default swaps (CDS) were designed as “insurance” to reimburse banks and bondholders when companies failed to pay their debts. Credit default swaps have become so popular among banks that the Comptroller of the Currency (OCC), which regulates banks, reports that they are the fastest...

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Posted in: unwinding of CDOs

Fairfax has cashed in some of its CDS gains

Fairfax Financial Holdings Ltd., which has just cashed in on a huge bet against the U.S. bond market, has laid down a wager that the credit crunch will hit Europe with a similar force. The insurance firm yesterday revealed a 2007 profit of $1.1-billion (U.S.), more than quadruple the previous year's results, thanks to its investment in credit default swaps (CDS), which rise in value when market conditions deteriorate. Fourth-quarter profit more than tripled to $564-million. But Fairfax chairman and chief executive officer Prem Watsa is also setting his sights across the Atlantic. Fairfax has invested about $60-million in European CDS in the belief that the lending problems that have struck UBS AG, Credit Suisse Group and other financial institutions may grow more serious."[The losses] are...

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Posted in: European CDS

war on tax evasion

Tax evasion has become something of a national pastime in major Western countries, thanks to symbiotic cooperation between legislators and lobbyists. Governments are realizing that there are trillions of dollars percolating around Lichtenstein, Luxembourg, the Cayman Islands, the Bahamas, the Virgin Islands, Jersey, Mauritius, Switzerland, Cyprus, etc.However, the “war on tax evasion” is as stupid as the “war on drugs.” Tax havens have a supply and demand function just like any other product. Intelligent people with capital will always create new havens to the extent that they need them.Getting to the main point: Lichtenstein has found itself dead in the middle of the scope of the German BND intelligence agency, which blatantly violated its extraterritorial mandate to hound the assets of wealthy...

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Posted in: war on tax evasion