Posted on 02/05/2010 4:13:23 PM PST by American Dream 246
This week we broke the story of possible criminal wrongdoing in the government takeover of insurance giant AIG. In the last several months, the US government has tried, unsuccessfully, to throw out plaintiff Kevin Murray’s case, alleging that the government’s takeover of AIG puts it in the position of supporting and promoting Islam and Shariah finance.
In the discovery process attorneys for Murray, David Yerushalmi and Robert Muise (of the Thomas More Law Center), discovered that the takeover itself may have been illegal, and have attempted to get Treasury Secretary under oath to try and untangle this mess. Again, the Fed and the Treasury Department tried to stonewall.
This past Tuesday, Federal district court judge Lawrence P. Zatkoff rejected the Treasury Department’s and the Fed’s effort to prevent any further discovery while the government attempts to convince the Sixth Circuit Court of Appeals to overrule Judge Zatkoff’s earlier ruling rejecting the government’s motion to dismiss the federal lawsuit challenging the government’s takeover of AIG on First Amendment-Establishment Clause grounds.
Tim Geithner: The “extraordinary move to depose a sitting Treasury Secretary”
The lawsuit, captioned Murray v. Geithner et al., was brought by attorneys David Yerushalmi and Robert Muise, representing the plaintiff, Kevin Murray, a tax payer and former combat Marine who served in Iraq. The federal lawsuit alleges that the U.S. government’s takeover and financial bailout of AIG was in violation of the Establishment Clause of the First Amendment.
Specifically, at the time of the government bailout (September-December 2008), AIG was (and still is) the world leader in promoting Shariah-compliant insurance products. Shariah is Islamic law, and it is the identical legal doctrine that demands capital punishment for apostasy and blasphemy and provides the legal and political mandates for global jihad followed religiously by the world’s Muslim terrorists. By propping up AIG with tax payer funds, the U.S. government is directly and indirectly promoting Islam and, more troubling, Shariah.
After the court rejected the government’s motion to dismiss the case and granted Plaintiff’s attorneys until May 2010 to conduct discovery into the AIG takeover, the government filed a motion asking Judge Zatkoff to certify the case for immediate appeal of his denial of the motion and to stay all further discovery. Today the government got its answer: No and no.
In what is an extremely well-written opinion, Judge Zatkoff scolded the government lawyers for filing the wrong motion at the wrong time and then proceeded to tell them they would have lost in any event because his earlier denial of the motion to dismiss was proper and well-considered.
The Court’s recent decision is especially timely and critical for Plaintiff Kevin Murray because his attorneys had previously filed a motion to compel Secretary Timothy Geithner to sit for a three-hour deposition. The basis for the “extraordinary move to depose a sitting Treasury Secretary” arose because Plaintiff’s counsel had earlier deposed the witnesses provided by the Treasury Department and the Federal Reserve Board and the government witnesses either testified inaccurately or feigned ignorance. The only one with all the answers turns out to be Secretary Geithner.
While forcing high government officials to sit for a deposition in civil litigation is extraordinary, federal rules allow a court to take this step when the government official has personal knowledge of a relevant element of the litigation and where the moving party has no reasonable alternative. In this case, attorneys Yerushalmi and Muise argued in their court papers that this exception fits their circumstances in spades.
“The witness designated by the government to testify on behalf of the Fed was less than forthright in his sworn testimony,” Plaintiff’s counsel Robert Muise of the Thomas More Law Center explained. “To his credit, he admitted he had prepared for his deposition by reading media reports and not actually reviewing the relevant documents. That might suggest that his lack of candor was willful blindness.”
David Yerushalmi, who is co-counsel with Robert Muise, laid out the grounds for the motion:
At the time of the takeover decision, Secretary Geithner was the head of the Federal Reserve Bank of New York and he was the leading advocate of the AIG takeover.
Moreover, he designed how the U.S. government would not only bail out AIG with tax payer dollars, but how the government would illegally take control of 80% of the voting shares through what was patently an illegal and invalid trust arrangement. It is apparent from the discovery we’ve conducted to date that this was done purposefully and with an intent to conceal the illegal takeover with a fraudulent trust.
Attorneys Yerushalmi and Muise want to ask Secretary Geithner:
* Why he forced AIG to take on so much debt that AIG’s credit rating, already in peril, was sure to collapse without yet additional government funds, essentially guaranteeing AIG would remain a ward of the state?
* Why he imposed such Draconian terms on AIG that there was no way it could survive without additional billions from U.S. tax payers?
* Why he then used AIG to secretly funnel 100% payoffs to AIG’s counterparties, including his colleagues and friends at Goldman Sachs, Merrill Lynch, and the European giant, Société Générale. In other words, why did Geithner decide to destroy AIG’s chances of survival as a private entity while surreptitiously saving and preserving private ownership of other domestic and foreign financial companies? And,
* Why he took control of 80% of AIG’s voting shares without legal authority to do so and used a fraudulent trust arrangement to conceal the illegal takeover?
BREAKING NEWS:
The court just today granted plaintiff Murray’s motion for leave to amend the complaint to include yet additional TARP funds provided to AIG after the filing of the complaint. While the court did not allow the plaintiff to add AIG as a defendant as he had also requested, Murray’s attorneys tell us that they had accomplished enough discovery to know where to look for the skeletons in AIG’s closet in any event.
More coming soon.
later
Thanks for posting. Very interesting.
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The Saudis have been busily buying off U.S. colleges and universities for years, long before 9/11.
The constant mealy-mouthed propaganda passing for education coupled with the greed and stupidity of the majority of our politicians makes it pretty easy for them, considering we've ended up with a country in which 55% of the population can't find their a$$ with both hands without government assistance.
You're a hard-working woman, Cindy.
ping
I’ve used mich worse on a daily basis in public since I was 5 and i’m 72, grow up!
Take your simple-minded Socialistic behind to Europe and LEAVE US ALONE!
This is a Capitalisitic Economy and still a republic. GET LOST!
With that being said, GOD BLESS AMERICA!
OMG I missed this one ...when was this ?
IIRC, it was Memorial Day at Arlington National Cemetery.
The US treasury owns $68 billion in AIG preferred stock, senior to its other preferred issues, and to the common. (Note that of an up to $30 billion total of the series F preferred approved for issue to the treasury, only $3 billion has been tapped). In the market as of Friday, the common had a value of $3 billion. The AFF series yields about 12%; the price is up to $14 from a low of $1.27 a share during the crisis, and $2 after the bailout. AIG has $70 billion in tangible book value as of its most recent quarterly sheet.
AIG has $400 billion of insurance float. Meaning, it receives the interest on that much capital without needing to pay to borrow it, between the time it earns premiums for insurance written and the time it pays out on future claims. There is every reason to expect that float will generate a continual earning power in the ten billion a year range. For example, in 2006 it earned $22 billion.
When corporate bonds were trading at 60-80 cents on the dollar to yield 10-15% on great depression level default fears, AIG was insolvent. But with corporate bonds trading near par to yield 5-6%, it is solvent, and will earn money to rise above the break even point already reached last year.
It may easily take 3-5 years to have a total workout and repayment to the treasury. But the treasury is already covered by assets fully worth what it put in to the company. Barring any new smash equal to the last in that time frame, the US treasury will get out whole.
What we see here, for the nth time, is the delusions of one entry accounting. A cash flow isn't a loss; buying a company's security with assets behind it, is not throwing the money away.
How much more? As of September of 2009, $71 billion more. Enough to cover the entire treasury investment. The common stock, which is junior to the treasury stuff, has a market value of $3 billion as of Friday.
AIG is solvent, and its valuable assets fully cover the investment the treasury made. Understand, at the lows of the whole market early in 2009, AIG was indeed underwater, and there was then a serious risk of eventual loss to the treasury. But AIGs main asset, corporate bonds, were on a tear all last year, and brought it back into the black.
Alexander Hamilton faced a country with zero credit, its bonds trading at 15 cents on the dollar, with no revenue system, with states fighting one another to avoid paying for anything. He left a country with firmly established finances and credit abroad. I'm trying to imagine Hamilton shrieking hysterically that we are doomed because we've promised ourselves too many entitlements, and I just can't.
I'm trying to imagine Ronaldus Magnus being scared of Barney Frank. Nope, that doesn't work either. I'm trying to imagine a Marine in the Argonne coming out of an acre of mustard gas listening to you-all whine about 10% unemployment with $40,000 a person average income and pretending it is an unbearable hardship, the end of America. Nope, that doesn't work either.
Worrying about Nazi dictators with jet fighters and V-2 rockets who've taken over all of Europe, sensible enough. Worrying about Joe Stalin being deliberately given atom bombs by American spies, sensible enough. Worrying about commie sympathizers deliberately furthering a communist take over of China by a murderous Mao, sensible enough. Worrying about madman with nukes banging their shoes and handing nukes to even madder third world hooligans, sensible enough. Even, today, worrying a bit about Iran getting nukes when our coward leaders won't do anything about it (when they easily could), OK, that too is sensible enough.
But pretending I must cringe in terror before this pack of incompetent halfwits that are the modern Democratic party, or somehow I'm not conservative enough, is hysteria for cowards, and I am not buying a syllable of it. We will send them packing. They are beneath our contempt. We will annihilate them politically and restore the country to sounder paths, and we won't even break a sweat doing it.
Man. The Hell. Up.
PS: If you find the time in your busy schedule, please review and hopefully sign this petition. We won't rest until Evan is FREE.
PPS: You need any new cabinets?? :-)
There is no crime in any of it. Just a sensible public policy is a time of crisis. The attempt to criminalize it is as obscene as prosecuting Marines over Fallujah.
Obviously you are not paying attention; the First Amendment is the only grounds upon which a citizen can bring the matter into court, and yes, it is a stretch. However, the issue of 'taking over' a business merely by announcement is a serious Chicago-style abuse of power, even more serious than Fallujah show trials. How did Timmy get a 40% interest in the company?
You assume that everything is on the up-and-up. Why? One side says that everything is fine, and the other side says that a crime has been committed. The presumption 'innocent until proven guilty' does not stop trials from going forward; it is a presumption, not a fact. You seem confused by this presumption into believing the administration's position. Let me give you a hint: sometimes people who claim to be innocent are proven at trial to be guilty.
This civil case is the only way the truth will come to light in time to do any good. We cannot trust this Justice Department to investigate this administration, nor can we expect elected officials to risk becoming 'the next Joe McCarthy' by too strident criticism. They might even be accused of attempting to criminalize policy differences. (Gasp!)
The problem is that this is not 17th century France and you are not Louus XIV.
You are wrong and no if YOU want the government to take over companies..YOU ARE NOT a Capitalist...
Louis that is.
Bookmark.
Especially given the insurance side of AIG had nothing to do with the bailouts.
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