WSJ: AIG's Tax Shelter Business Was 'Even Bigger' Than Their CDOs; IRS Calls At Least One Of Them A 'Sham'
By Susie Madrak Wednesday Apr 01, 2009 5:45amAnd apparently phony, to boot! I don't know about you, but I'm feeling even better about writing AIG that blank check. Joe Cassano was the head of AIG's financial products division who insured all those bad CDOs - you know, the ones that helped trigger this global meltdown?
The Feds are closing in on a criminal fraud case against Joseph Cassano, reports ABC News, which tracked down the former AIG Financial Products czar wearing blue spandex and a sheepish expression outside his home in London. And before you wonder why a Brooklyn College educated swaps dealer with a name like Joe Cassano lives in London again, the answer is probably "taxes" -- and decimating taxes, it may not shock you to know, is fast emerging as the cornerstone of the AIG business model.
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 [tax law expert Jack] Blum. "All of these contracts were moved offshore for the express purpose of getting out from under regulation and tax evasion."
And as breathtaking as the sum of taxpayer dollars AIG has managed to put down in its post-crisis nationalized afterlife, the zombie insurer might possibly have indirectly scammed the government out of more money back in its Triple-A days. Today the Wall Street Journal explores AIG's euphemistically-named "tax structuring" business in a story about an IRS battle with Hewlett-Packard over an offshore entity -- or what the IRS terms a "sham that lacked economic substance and a business purpose" -- that AIG set up for the company to collect $132 million in tax credits. AIG's tax business, is "even bigger than the credit-default swaps business that led to the company's meltdown," a person "familiar with the business" tells the Journal.
But that might be compartmentalizing things: we are beginning to suspect the credit default swap business and the tax "structuring" business were the same thing -- not just because they served the same end.
An attorney and tax shelter expert we spoke with today says AIG FP was one of the biggest players in the business of engineering offshore tax shelters for corporate and private clients that resembled a multibillion dollar tax evasion scheme called Son of Boss (we don't have time to figure out why) that thousands of corporations and wealthy individuals used to book phony capital gains losses and evade most or all of their income taxes in the late nineties and early 00s. The mind-numbing litany of esoteric loopholes such tax shelters employ to concoct said phony losses is something you don't want to hear about at this hour -- trust us -- but they are generally anchored by a set of exotic unregulated derivative securities whose 'notional value' can help fabricate losses that don't actually exist. Which is where Cassano came in -- only, obviously, the losses existed.
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The only shelter Cassano should be involved in is a homeless shelter. Spandex is SO 1980s.
http://www.youtube.com/watch?v=LJMnES7WoT4
will the IRS take on the tax shelter investors?
Here's the answer: Not if any of them have the right political connections.
http://www.youtube.com/watch?v=-yKdGWXTUG4
[Deleted. Don't advocate violence at this site. Site Monitor]
I have no argument against that.
Take a lesson from our friends in the UK
http://us.rd.yahoo.com/dailynews/rss/topstori...
http://www.youtube.com/watch?v=brL1AKdhLyQ
Remember, wondering why Blair and Bush were such buddies! Olde' England screwed America (and the world) again!
that are rioting.
Not the bloody bankers.
The bankers are friends of no one.
I'm just fed up and quite angry...and I meant after a fair and speedy trial.
I wasn't advocating mob justice.
Shocking
http://www.youtube.com/watch?v=d2di9U-jJpY
from the 1960s.
Have always thought it interesting that Sam was (is?) Mexican.
is a Texan of mixed heritage, mostly Hispanic.
Apologies for the mis-information.
was the nicest thing Anglos called him growing up in 1950's Dallas.
why? this guy needs to be strung up with the rest of the bush administration.
And he's just one of many many wealthy bush pioneers who have the same criminal profile. Time for a little good old fashioned profiling before the gallows are up and running.
Yea though I walk thru the valley of death
I shall fear no evil, for I am the meanest "Son Of Boss" in the valley.
Noooooo, it would be just too good. S.O.B. ?
I wouldn't be too worried about anything what with a "justice department" that ignores kidnapping, rape, torture, murder, and assorted war crimes.
Who knew they still had it in 'em???
They have done more damage to our country and they should be treated as such. Waterboard Wall Street!!!
http://www.funnyordie.com/videos/1752181bff/w...
...to be uncovered, Treasury is trying to hire more of the crooks who brought us this mess courtesy of (among other things) the Gramm-Leach-Bliley Act http://theplumline.whorunsgov.com/economy/nom...
Does anyone really believe the Obama administration will do the right thing and start firing all the executives at AIG that turned a blind eye to this crap?
I don't.
The gift that keeps on taking. It's no wonder the Dems and Reps bailed them out. Their actions rival those of only politicians in the fraudulent lying schemes of things.
and investigate the possibility of tax fraud in ALL of them.
I see no reason to give these people any more money until these regulations and loopholes are fixed, and any perpetrators brought to justice.
When you have a hole in a bucket, you don't fix the problem by adding more water. Our federal government needs to learn this simple principle.
unless it involves dusky-hued folk robbing Quickie-Mart of $87.39 at gunpoint.
Now THAT is REAL crime.
As seen on Law and Order(TM).
Move along folks; nothing to see here.
the Righties maintain there is a deterrent effect at work in maintaining it in the repertoire of punishments, and in cases like Cassanno's--or Madoff's--where there is no appeal to the appearance of innocence, where guilt is established, I think it would be useful to try it, and see if there was indeed a deterrent effect on the survivors.
A really public execution.
Maybe with a guillotine...
where's loud mouth rick Satelli NOW. this is a major issue but i haven't personally seen much if any regarding tax havens on the t.v. media. the french prime minister is making a big deal of it at the G-20 which is good. don't tell me the BUSH administration didn't fxxk things up.
Hey you crooks and whores in DC , lets have more of that Reaganite deregulation and how about some more loop holes too !
someone in the MSM might get around to asking Larry Summers about those pesky derivatives that got AIG into trouble. It seems that Summers didn't learn a thing after losing billions for Harvard. Interesting piece at TPM. These financial halfwits create the mess and then expect we the taxpayer to pick up the tab and Summers is who Obama picks to run the economy? My, my Mr.President. What were you thinking?
Harvard Derivatives Whiz Fired For Emailing Larry Summers About "Frightening" Trades?
By Moe Tkacik - April 1, 2009, 1:31PM
A former quantitative analyst at Harvard Management Company, the university's once-vaunted endowment manager, tells the Harvard Crimson she was fired for voicing concern to then-university president Larry Summers' chief of staff about the money manager's risky use of derivatives the traders didn't understand.
Cassanno didn't what that auditor "polluting the process"
Seems he didn't want his "process" to be uncovered.
Please can we get over this "too big to fail" $hit now?
If a company is too big to fail, then it is a corrupt company.
Can we also assume that if a company has an offshore address they are hiding more money than they are claiming?
This is just a partial list of those companies too big to fail with off shore tax haven accounts....www.worldreports.org It's just amazing what you don't find in the MSM here in our country.
OFFSHORE SUBSIDIARIES OF U.S. FRAUDULENT FINANCE SPECIALISTS
Before reporting the sequel to The Guardian’s revelations below, the following open information listing the offshore entities of well-known US Fraudulent Finance institutions is pertinent here:
• A.I.G.: Last time we checked: 728 subsidiaries in offshore centers.
• Bank of America: 59 subsidiaries in the Cayman Islands.
• Citigroup: 427 subsidiaries: 21 in Jersey, 91 in Luxembourg, 19 in Bermuda, 158 in the Caymans.
• Countrywide Financial: Two subsidiaries in Guernsey.
• Goldman Sachs Group: Three subsidiaries in Bermuda, Five in Mauritius, 15 in the Caymans.
• Lehman Brothers: 31 subsidiaries in the Cayman Islands.
• News Corporation (Rupert Murdoch): 33 subsidiaries in the Cayman Islands. Others known.
• Wachovia: 18 Subsidiaries in Bermuda, three in the British Virgin Islands, 16 in the Caymans.
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