101 online
Most Popular Choices
Share on Facebook 13 Printer Friendly Page More Sharing
OpEdNews Op Eds   

Hang the Bastards - Or At Least Bring Fraud Charges

By       (Page 1 of 1 pages)   2 comments
Message Lord Stirling
The American nation, from the President down, is outraged over the continuing multi-million dollar bonuses to AIG executives and traders after $180 billion in public funds have gone to shore up this massive insurance firm. At AIG, especially in its London operation, massive numbers and amounts of insurance policies were written to ensure risky trades by customers. Policies that largely did not have any reserve set aside to cover payouts.

Similar totally irresponsible actions are behind the troubles at many Wall Street firms and banks. Executives and traders engaging in business deals that resulted in short term profits for the firm, and very high bonuses for themselves, but ended up costing the firms stockholders truly massive amounts of money and the taxpayers even more money in the form of bailouts to cover the criminal behavior. I use the word "criminal" here because that is what was happening and not just in a broad layman's use of the word. Fraud is generally defined in law as an intentional misrepresentation of a material existing fact, made by one person to another, with knowledge of its falsity and for the purpose of inducing the other person to act, and upon which the other person relies with resulting injury or damage (which can include loss of money). Fraud may also be made by an purposeful failure to state material facts or by an omission, which nondisclosure makes other statements misleading.

In the case of AIG the fraud was two-fold: (1) The stockholders were relying on the corporate officers and employees to write insurance policies that were both profitable and reasonable in the sense of a reasonable risk to the corporation; (2) The parties paying for the insurance coverage were relying on the corporation to insure their risk and to be able to pay the insured amount in the event of a legitimate claim. In both cases, the corporate officers and those selling/writing the policies knew or should have known that setting aside NO RESERVES or very small reserves placed the corporate stockholders and the policy holders at grave risk. The corporate officers and those selling/writing the policies were profiting from the high profit sales of these insurance policies, without reserve amounts being maintained, by the receiving of large bonuses and other remuneration based on the short-term profits from the sales of the policies without regard to the mid and long-term consequences to the corporate stockholders or to the policy holders. This constitutes fraud. It does not matter if the exotic policies were in a insurance law loophole or not. What matters is that the corporate officers and employees engaged in fraud by selling policies without regard to the stockholders or to the policy holders, and knew or should have known from normal insurance practices that selling insurance policies without significant reserve amounts set aside to cover claims was certain to cause substantial loss to both stockholders and policy holders. The resulting crisis caused by the AIG policies is 'Prima Facie' evidence of same.

The corporate officers and those employees involved engaged in fraud against the corporate stockholders; they also engaged in fraud against the policy holders. They should be tried for criminal fraud at the Federal level and/or at the state level. This can be undertaken by the US Department of Justice or by State Attorney Generals or local county prosecutors in jurisdictions where either stockholders and/or policy holders reside or do business in.

Similar cases of fraud exists throughout the many investment banks and institutions currently receiving billions in federal bailout money. We have not yet seen criminal prosecutions of these matters but the public is totally outraged and the crimes are massive in scope. It is high time that federal and state/local prosecutors begin a parade of corporate officers and senior employees before grand juries for criminal indictments and the resulting criminal trials.

Not only billions but trillions of dollars have been lost to these multiple frauds and it is time that the criminals responsible face the law. Our very system of government demands that the guilty parties be brought to justice.

Must Read 1   Well Said 1   Interesting 1  
Rate It | View Ratings

Lord Stirling Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

Earl of Stirling, Hereditary Governor and Lord Lieutenant of Canada. Author of CASH FOR PEERAGES: THE SMOKING GUN (Lulu Press at www.lulu.com/content/953682). Web site: http://europebusines.blogspot.com/
Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Writers Guidelines

Contact EditorContact Editor
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEd News Newsletter
   (Opens new browser window)

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Iran War ~ How It Will Unfold


Bush Agrees to War on Iran

Massive US Naval Armada Heads For Iran

The Perfect Storm from Hell

Sarah Palin to run for Ted Stevens US Senate seat

To View Comments or Join the Conversation:

Tell A Friend