Breaking News: Evidence of criminal wrongdoing in Treasury’s handling of AIG?

Today Secure Freedom Radio has breaking news from senior litigator David Yerushalmi, a major story uncovering evidence of criminal wrongdoing in the AIG matter.

Transcript

FRANK GAFFNEY: Congressman Darrell Issa, ranking member on House committee on Oversight and Government Reform, confronting Treasury Secretary Tim Geithner:

ISSA: In recent weeks, this committee, receiving these documents, have caused us to better underst the NY Fed pressured AIG to avoid negotiations designed to obtain the haircut, as its called, from its counterparties and to keep the details of the counterparties payments from appearing on the firms’ forms at the SEC.

David Yerushalmi, Securities specialist and senior litigator in Murray v. Geithner et al.

DAVID YERUSHALMI: In September of 2008 the US govt took over AIG, effectively over a period of months they invested $180 billion in AIG, collateralized all of its assets, and took 80% of its ownership through shares and voting rights.  They controlled AIG from top to bottom.  Part of that money that they gave to AIG.

When Mr. Geithner was serving prior to his current position as Secretary of Treasury, he was President of Federal Reserve Bank of New York.  They were the ones that originally gave AIG $85 billion of debt by opening up a discount window.  He went to AIG and said, we want you to pay off all of the financial institutions (our buddies on Wall St and even in Europe) because they’re demanding money from you for all these credit default swaps and toxic assets that everyone hears about.

So when AIG started talking to these financial institutions, what would you normally expect, that they would go to their creditors and say, we’re on the verge of bankruptcy they’d ask them to take less than 100% on the dollar – to “take a haircut.”  But the Federal Reserve Bank of New York and Mr. Geithner said no – you need to pay them 100 cents on the dollar because it would be wrong for the Federal Reserve Bank to use it’s clout to gain a better bargaining position.  Companies like Goldman Sachs, UBS, Societe Generale in Paris, etc. were involved as creditors.

GAFFNEY: Here’s the breaking news – what did you discover in the process of your lawsuit on behalf of this Iraq war veteran that sheds further light on this story and raises real concerns about not just peculiar and fiduciarily-challenged behavior but maybe even criminal activity?

YERUSHALMI: Keep in mind that the forcing of AIG to pay the counterparties to pay 100 cents on the dollar may have been stupid, or bad policy or bad business, but it wasn’t illegal.  But in our lawsuit, which we had brought against the Federal Reserve and Treasury when they acquired AIG, they acquired the world’s largest provider of Shariah-compliant insurance products.

GAFFNEY: Shariah, of course, a term we use all the time (people here are familiar with it at Secure Freedom Radio), namely the  theo-political-legal program– that oppressive, barbaric ideology– that the authorities of Islam claim is the true faith. And this is practiced by AIG through its insurance products.

YERUSHALMI: Not just practices, but promoted. Not just to Muslims but to the non-Muslim world…

GAFFNEY: … And we own them as taxpayers. and the lawsuit questions the constitutionality, given the Establishment clause regarding of separation of Church and State.  We’re running out of time, jump to the news that we have here.

YERUSHALMI: So here’s what we find out in the midst of discovery when we depose the Treasury Department’s deponent and the Fed and get documents, here’s what we’ve learned:

The Federal Reserve Bank of New York at the time that it structured the debt that it was going to give AIG insisted that not only did it get the debt, not only would it get principal and interest payments and collateral for that, it wanted 80% of AIG, precisely 77.9% of the shares and the voting rights.  But the Federal Reserve Bank and Geithner knew that it was illegal for the Fed system whether there’s a Fed or the Federal Reserve Bank of New York to own that, so what did they do?  They created this independent trust.

GAFFNEY: The same was true of Treasury right?

YERUSHALMI: Well that’s exactly right.  You would think that if they couldn’t own it maybe they could’ve got the Treasury Department.  But the Treasury Department had no legislative authority to take equity from AIG either.  So what did they do?  They came and opened up a discount window but created a so-called “independent trust” and they hired three trustees, and they insisted that these people were independent non-governmental actors, no conflicts of interests.  But in crafting the trust agreement they slipped in a barely noticed provision of the trust agreement which said “Oh by the way, the Fed controls the trust completely, its terms and effectively the trustees.”  Under anybody’s rendition of trust law this is not a valid trust, this is simply a ruse or an artifice for the Federal Reserve Bank.  The second–

GAFFNEY: Which makes the proposition- David we’re just about out of time.  Which makes what they did as I understand it from a technical, legal sense, money laundering.

YERUSHALMI: Exactly right, if you try to do something which is illegal, gaining control of ownership by the Federal Reserve Bank of AIG which was not authorized through a fraudulent artifice then you have violated- that’s a classic violation of money laundering.

GAFFNEY: You heard it here first at Secure Freedom Radio folks.  We have evidence of criminal activity on the part of the man who is now Secretary of the Treasury and the man who was just reconfirmed as Chairman of the Federal Reserve Board.  We will be pursuing this, David Yerushalmi, as I know you will be very closely.  Thank you for joining us here at Secure Freedom Radio.  We will be hopefully seeing some of these congressional auditors like Congressman Issa taking up this issue as well. Obviously this plot is continuing to thicken.