Unsealed Whistleblower Case Claims Major Firms Perpetrated $137B Fraudulent Scheme On U.S. Government
A whistleblower suit has been unsealed by a California federal court accusing AIG, Goldman Sachs, Merrill Lynch, Deutsche Bank and Societe Generale of perpetrating a fraudulent scheme to dupe the Federal Reserve Bank of New York and the U.S. Department of the Treasury into giving AIG more than $137 billion in bailout loans during the financial crisis of 2008, according to an article in Law 360.
The complaint by a California couple had been under seal since September 2010, alleging that AIG and other co-defendants lied and engaged in unlawful conduct by loading up their balance sheets with inflated assets, while taking out massive amounts of cash in the form of salaries, bonuses and dividend payouts. The banks, whose collateralized debt obligations (CDO) were insured by AIG, allegedly lied about how they were using loan proceeds and knew the CDO's were high risk and defective even though they marketed them as being safe investments. AIG is alleged to have used reckless underwriting standards to offer them protection.
The case is Casady, et al v. American International Group, Inc., et al, number 3:10-CV-00431, in the U.S. District Court for the Southern District of California. The plaintiffs are seeking treble damages in a jury trial.