Report: Federal prosecutors probing Joseph Cassano, the guy who blew up A.I.G.

Peek-a-boo, Joe. Maybe we'll see you in court.

ABC News has this report, calculated to make every recession-weary American juts a little more cheerful today:

The FBI and federal prosecutors are reportedly closing in on the AIG executive whose suspect investments cost the insurance giant hundreds of billions of dollars. The government is investigating whether or not 54-year old Brooklyn-native Joseph Cassano committed criminal fraud in virtually bankrupting the company.

Cassano is the guy who headed A.I.G.'s now-infamous Financial Products Division, the "casino" built on top of an otherwise prosaic insurance company that issued a gazillion dollars of "insurance" in the form of so-called credit default swaps on so many of those toxic assets that are dragging the global financial system down and the economy with it. A.I.G.'s insurance made these assets easily marketable, so that they wound up poisoning the portfolios of a host of major financial institutions.

"He almost single-handedly is responsible for bringing AIG down and by reference the economy of this country," said Rep. Jackie Speier (D-Ca.)

(snip)

"He is the golden boy of the casino," said Rep. Speier. "They basically took peoples' hard earned money and threw it away, gambled it and lost everything. And he must be held accountable for the fraud, for the dereliction of his duty, and for the havoc that he's wrought on America."

(snip)

"AIG was insuring junk and it was the AIG insurance that made the junk marketable," said tax law expert Jack Blum. "American taxpayers have been put on the hook for this insurance junk."

Even as the bad loans began to emerge, Cassano boasted to Wall Street analysts that his transactions, called credit default swaps, were foolproof.

(snip)

An ABC News investigation found that Cassano set up some dozens of separate companies, some off-shore, to handle the transactions, effectively keeping them off the books of AIG and out of sight of regulators in the U.S. and the United Kingdom.

"This is the other very important issue underneath the AIG scandal," said Blum. "All of these contracts were moved offshore for the express purpose of getting out from under regulation and tax evasion."

Cassano "earned" more than $300 million in the process of destroying A.I.G., and he's kept every nickel of it.

It's possible that everything Cassano did was legal -- although it certainly should not have been. But business fraud, tax evasion or accounting shenanigans are often part and parcel of high stakes business gambling of the kind Cassano excelled at. It would be a small but sweet satisfaction to see this wise guy indicted.

The Cassano-Chris Dodd Connection

Cassano is also the news today for his role in collecting $162,000 in contributions from A.I.G. executives to the campaign chest of Senator Christopher Dodd (D., CT). Cassano pulled in the dough in just six weeks by leaning on his Financial Products Division cohorts and their spouses to each give Dodd $2,100 for the primary and another $2,100 for the general election. In a November 17, 2006, e-mail, he made a flat out pitch for the money because Dodd was "next in line" (when the Democrats gained control of the Senate in the 2006 election) to chair the Senate Banking Committee, with its key role in overseeing A.I.G.'s business. Cassano pointed out that Dodd would "have the opportunity to set the committee's agenda on issues critical to the financial services industry."

Dodd quickly transferred the A.I.G. cash to his 2008 Presidential campaign committee to help him get his ultimately lame national bid off the ground. In his email, Cassano was understanding about this, writing, "As he considers running for president in 2008, Senator Dodd has asked us for our support with his reelection campaign and we have offered to be supportive."

Nice. Let's hope Dodd pays a price for his connivance with this leech.

What do you think about Cassano's role at A.I.G. and the Dodd connection? Post a comment.