Feds May Seek to Indict Ex-AIG Exec: Report

Federal prosecutors are preparing to choose a grand jury to consider an indictment of Joseph Cassano, the former head of the AIG division that nearly crippled the insurance company.

Author:: Joseph Woelfel
Publish date:: Sep 11, 2009 1:48 AM EDT

NEW YORK (

TheStreet

) -- Federal prosecutors are preparing to choose a grand jury in Brooklyn, N.Y., to consider an indictment of the former head of the AIG division that nearly crippled the insurance company a year ago.

The

Wall Street Journal

reports the Justice Department and

Securities and Exchange Commission

have been investigating whether Joseph Cassano, the former head of AIG's Financial Products unit, committed securities fraud in allegedly misleading investors by overstating the value of mortgage-related contracts and failing to disclose material facts about them to the insurer's outside auditor. The

Journal

cited people familiar with the matter.

The grand jury also could consider charges against other employees of

American International Group

(AIG) - Get Report

, the

Journal

reports. Cassano has denied wrongdoing. His lawyer has said AIG was fully aware of Cassano's activities, and that Cassano has been cooperating with the inquiry. AIG declined to comment for the

Journal

Cassano left AIG last year. It was reported back in April that a criminal investigation by the Justice Department and SEC was focusing on Cassano and two other executives.

-- Reported by Joseph Woelfel in New York

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