AIG SunAmerica Background Information
American International Group (AIG) is now a major competitor in the fields of insurance and financial services, with a market capitalization ranking it among the top 20 companies in the world. AIG's common stock is listed on the New York Stock Exchange, as well as stock exchanges in
SunAmerica Inc. began its financial service operations 1971 with the acquisition of Sun Life Insurance Company of
AIG acquired SunAmerica in 1999 and American General in 2001, combining these two companies with its own AIG Life to form AIG SunAmerica, now the retirement savings division of AIG. The company claims that it now provides its products and services to than four million families across the
Shepherd Smith Edwards & Kantas LTD LLP Law Firm
Each lawyer and staff member of our firm is devoted to assisting investors to recover losses caused by unsuitability, over-concentration, fraud, misrepresentation, self-dealing, unauthorized trades or other wrongful acts, whether intentional or negligent. We have handled over a thousand cases against hundreds of large and small investment firms, including claims against both AIG and SunAmerica.
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AIG Pays $1.64 Billion to Avoid Fraud Prosecution
After a lengthy investigation involving misleading accounting practices, American International Group, Inc. (AIG) agreed to pay a record $1.64 billion to settle claims against it by the SEC and
AIG allegedly took part in bid-rigging schemes, paid secret commissions to insurance brokers to steer business to it, used phony insurance deals to burnish its earnings and misstated the amounts of workers' compensation premiums it had collected.
AIG earlier agreed to settle allegations it helped two customer companies commit accounting fraud. Under investigation by the Securities Exchange Commission (SEC) and facing prosecution by the Fraud Section of the United States Department of Justice and the U.S. Attorney for the Southern District of Indiana, AIG agreed to settle that matter and to be enjoined from future violations of federal securities laws.
In 2003, AIG settled a case brought by the SEC and agreeing to pay a $10 million civil fine to resolve allegations it fraudulently helped a company falsify its earnings report and hide losses, thus avoiding prosecution at that time.
AIG was also required it to establish a transaction review committee, which answered to an independent consultant appointed by the SEC to review the policies and procedures of that committee and to determine if the transactions were used by others violate GAAP or obtain a specified accounting or reporting result.
SunAmerica Pays $7 Million in Church Fraud Case
After its agent was indicted for perpetrating a “Ponzi” scheme Sunamerica agreed to pay $7 million, part through insurance, to resolve its own liability in a long-running “church-fraud” case dubbed "Operation Island Scam" by federal investigators.
The charges stem from a fraud case involving hundreds of mostly elderly church members who lost millions in a Ponzi scheme run by a SunAmerica’s agent and others. As a result of criminal proceedings, several individuals related to this agent were sentenced to prison in the matter.
The ringleader of the group was an affiliate of SunAmerica Securities of Phoenix, Arizona. This agent was also an evangelical Quaker who told his investors he could get them above-market rates of interest on their money through real-estate investments. Instead the funds were invested in a Ponzi scheme, in which funds invested by later investors are used to make payments to earlier investors, with earlier investors often providing testimonials of how well their investments had performed.
According to an attorney for the victims, about 200 of the investors, most elderly church members, will recoup up to 70% of what they lost. Regulators warn of such “affinity fraud” cases, in which persons brought together by language, race, religion or other factors can fall victim to others in the same group. Key members of a group are sometimes, knowing or unknowing, collaborators in affinity fraud.Aig's FSC Securities - A 'Cozy' Place for Fraud?
FSC created "an extremely cozy environment for a man bent on defrauding his customers," said three NASD Securities Arbitrators, “management ineptness was broad" and the firm ignored red flags that the broker had "selling away" issues (using one's status at a firm to aid in the sale of investments not approved by the firm).
FSC Securities of Atlanta, part of the AIG Financial Group, had warning when it hired broker Scott Hollenbeck that he had problems during his past employment, said a panel of three arbitrators in their award to several investors. During his past employment, they say, he even embezzled money from a church organization.
Hollenbeck was based in
Securities arbitration is a private process, without records available to the public, and the decisions made ("awards") generally do not include much discussion about the case. However, the these arbitrators saw fit to blast FSC while awarding victims almost $700,000, including legal fees and expenses.