A $200 billion lawsuit filed on behalf of shareholders of American International Group has been amended to include Treasury Secretary Tim Geithner, former Treasury Secretary Henry Paulson and former Securities and Exchange Commission Chairman Christopher Cox as defendants.
The class action lawsuit filed in federal court in Los Angeles is a “wide reaching” claim that will do what Congress cannot, said Freedom Watch USA founder Larry Klayman.
“The American people, not the compromised ruling elite in Washington, D.C., have begun a second American Revolution to take the country back from the con men on Wall Street, and on Pennsylvania Avenue – who under successive administrations played a central role in the meltdown of the U.S. financial system and economy,” Klayman said.
The amended complaint now alleges that the additional defendants violated the constitutional rights of the shareholders by denying them the right to their property, the shares themselves.
“The inspiration for this amendment was information disclosed by University of Missouri professor William K. Black on the Bill Moyers’ PBS television show last Friday, where he implicated these government officials in a massive cover up of the banking scandal, mostly for the benefit of Goldman Sachs, the former employer of both Paulson and Geithner, in which they held a significant financial interest,” Klayman reported.
“As for Cox, his reckless and intentionally impotent oversight at the SEC is the basis for the claim against him,” he said.
Klayman noted that under precedent established by the U.S. Supreme Court, U.S. vs. Bivens, the defendants can be named as individuals, as well as officials.
Klayman also decried the apparent attempt by AIG CEO Edward Liddy to avoid being served with the original lawsuit.
On at least three occasions already, he has “run,” telling AIG security not to allow process servers into his office suite, Klayman said.
“This is an absolute disgrace,” said Klayman. “It shows the complete lack of respect AIG and its directors have for the Rule of Law. Liddy can run but he cannot hide. It’s only a matter of time before he and his co-horts, along with Geithner, Paulson and Cox, will be held accountable by the American people, not compromised politicians in Washington, D.C., like Barney Frank Chairman of the House Financial Services Committee, who yesterday refused to answer a legitimate question from a Harvard student who inquired why he and his committee failed to oversee the banking scandal.”
The complaint alleges the defendants “jointly and severally, have seriously undermined and damaged AIG’s financial health and valuable past reputation by systematically causing and/or permitting the company to engage in a litany of highly risky, detrimental and reckless business dealings …. that have caused the company to verge on bankruptcy and which have required in excess of $190 billion dollars to date of government provided monies to prevent total company failure.”
The action seeks judgments against defendants “for the amount of damages sustained by the shareholders as a result of the defendants’ breaches of fiduciary duties, gross mismanagement and waste of corporate assets, causing a descrease in shareholders equity in an amount in excess of $200 billion dollars.”
“Freedom Watch will not rest until justice is done and it won’t come from the Obama administration, bent on deceiving the U.S. taxpayer that it intends to clean up this corruption, all the while lining the pockets of its friends at AIG with government bailout money, who gave handsomely to have the president elected,” said Klayman.
The lawsuit alleges the defendants, also including Richard Holbrooke and Martin Feldstein of the Obama administration, have caused the company’s value in 1990 to drop from “approximately $217 billion dollars” to today’s estimated $3.5 billion, “a net decline of $214.5 billion based on the market capitalization rate formula.”
AIG used “financially unsound” credit default swap derivative contracts and collateralized debt obligations to expose the company to “enormous risk,” the suit says.
“After AIG posted a record breaking $62 billion dollar loss for the 4th quarter of 2008, the
defendants, each and every one of them, incredibly paid out $165 million dollars in bonuses to its executives in March of 2009 and $55 million dollars in December of 2008 for this poor
performance, and also paid out dividends when this was not reasonable or warranted under the
circumstances,” Klayman’s case alleges.
Klayman said 400 workers each received between $1,000 and $6.5 million, and seven executives in the unit responsible for many of the losses each got more than $3 million.
“The bonuses were allegedly for retention, in part, and also performance based, but
it has become clear that this was not the reason for the bonuses; rather looting of shareholder and government assets was the motivation,” the case alleges.
It continues, “During this time of unprecedented wealth destruction for AIG
shareholders, each of the defendants were compensated generously by way of handsome salaries
and exorbitant bonuses and dividends, among other benefits and perks, despite their misconduct.”
WND recently reported a poll indicated three in four Americans want members of Congress to return money they got from AIG for their political campaigns.
The poll from The O’Leary Report by Brad O’Leary and Zogby International showed 73 percent of Americans think politicians, including President Obama and Sen. Chris Dodd, D-Conn., should not have profited from AIG and should return the money.
Obama and Dodd were the top recipients of campaign largesse from AIG over the past two years, with Obama getting $104,332 and Dodd taking in $103,900. Others received money, too, but in smaller amounts. All together, AIG donated $644,218 to federal politicians.
According to the Washington Post, Federal Reserve Chairman Ben Bernanke recently confirmed that he had wanted to sue AIG to stop the company from paying out about $165 million in bonuses, but Fed lawyers advised against the litigation.
AIG CEO Edward Liddy told Congress last week that the Fed signed off on the bonuses before they became public. The company also has said some of the employees have promised to return the bonuses voluntarily.