Treasury announces 3rd round of AIG stock sales

WASHINGTON (AP) -- The Treasury Department announced Friday that it will sell more of its shares of common stock in insurance giant American International Group to recoup more of the support the government provided AIG in what was the biggest bailout of the 2008 financial crisis.

It will be Treasury's third sale of AIG stock. The sale is expected to raise around $6 billion. AIG said it planned to purchase $2 billion of the amount put up for sale. The new offering follows Treasury sales of $5.8 billion in AIG common stock in May 2011 and $6 billion in March of this year. AIG purchased $3 billion of the March offering.

Treasury and the Federal Reserve stepped in with $182 billion to rescue New York-based AIG from collapse. Treasury still owns about 70 percent of AIG's common stock.

Treasury's announcement came a day after AIG announced that its net income, after paying dividends, climbed to $3.2 billion, or $1.71 a share, in the three months ended March 31. That compares to net income of $1.3 billion, or 31 cents a share, in the same period last year.

The AIG gains in the first quarter came from an improved performance at its Chartis and SunAmerica insurance units. The company's aircraft leasing business also posted higher operating income.

Treasury still has an outstanding investment of $35.7 billion in AIG out of the initial $68 billion it provided to keep the company from collapsing. The Treasury support came from the government's $700 billion Troubled Asset Relief Program.

Treasury estimates that the Fed and Treasury together have recouped all but about $44 billion of the initial $182 billion bailout amount.

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Treasury to sell more AIG common stock

By Mark Felsenthal

WASHINGTON (Reuters) - The Treasury Department said on Friday it plans a third sale of the common stock of American International Group (AIG) that it acquired as part of the government bailout of the insurer in 2008, at the height of the financial crisis.

The Treasury said the size and price of the offering are to be determined. Buyers purchased $6 billion of AIG common stock in March and $5.8 billion worth in May 2011.

AIG has said it intends to buy up to $2 billion of the stock sold in the offering, the Treasury Department said in a statement. AIG bought around $3 billion worth of stock in the March sale, a Treasury official said.

The Treasury and the Federal Reserve made $182 billion available to prop up the company, which couldn't meet its credit insurance obligations when housing markets crashed. U.S. authorities retain approximately $44 billion of that investment, a Treasury official said.

The AIG rescue was the largest U.S. government bailout of a private company in history.

Bank of America Merrill Lynch (BAC) , Citigroup (C), Credit Suisse, Deutsche Bank (DBK.DE), Goldman Sachs (GS), J.P. Morgan (JPM) and Morgan Stanley (MS) have been hired as bookrunners for the offering, Treasury said.

Treasury said last month it expects that many of the financial crisis programs it and other banking authorities implemented will end up making a profit for taxpayers.

(Reporting by Mark Felsenthal; Editing by Bernard Orr and Tim Dobbyn)

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Ex-NY bank director gets prison in $60M stock scam

NEW YORK (AP) -- A former bank director who pleaded guilty to grand larceny in a $60 million stock fraud scheme and became a critical witness against a former colleague was sentenced Monday to up to 4 1/2 years in prison.

John Mazzuto, wearing a rumpled beige sweater, apologized for his crimes while he was CEO of Industrial Enterprises of America Inc.

"I committed a crime," he said. "... It affected everybody around me. Family, friends, colleagues, all that's been destroyed, and that's hard."

Mazzuto, 62, was accused of illegally giving stocks to friends and relatives, lying to investors and pumping up the company's stock prices. He pleaded guilty last year to grand larceny and scheming to defraud and was sentenced to serve between 1 1/2 years and 4 1/2 years in prison.

He would have faced more time had he been convicted at a trial, but instead he cooperated with authorities and testified against former colleague James Margulies, a Cleveland attorney who was the company's finance chief.

Mazzuto testified for nearly a week during Margulies' trial, a fact that did not go unnoticed by prosecutors Monday.

"Mr. Mazzuto was an exemplary cooperator and witness," Manhattan Assistant District Attorney Garrett Lynch said.

He said Mazzuto met with the office more than 100 times to review documents and testified for about a week.

Margulies was convicted and sentenced to seven to 21 years in prison. He called his involvement with the company the worst choice of his life and portrayed himself as the inexperienced dupe of Mazzuto, a sophisticated businessman.

The judge said Mazzuto's crimes didn't negate Margulies' role in a scheme that netted him $7 million to bankroll private jet travel, expensive homes and other plums.

Mazzuto garnered from the stock scheme more than $15 million, money that bought him a $3 million Southampton house he's since sold and his $2.5 million Palm Beach Gardens, Fla., home, prosecutors said.

He also endowed a baseball coaching post and underwrote a practice field for Yale University, his alma mater, which praised his "incredible generosity" in a 2009 item on the team's website. Prosecutors said he gave the university $1.5 million in Industrial Enterprises stock.

A contrite Mazzuto said at sentencing, "I have to live with this for the rest of my life."

He had been out on bail since his guilty plea, and during that time he was arrested twice for drunken driving in Florida. Those cases are open, and he faces additional jail time there after he serves his time in New York.

Prosecutors and defense attorney Richard Asche said Mazzuto completed a treatment program and is attending Alcoholics Anonymous meetings daily.

Mazzuto said he intends to spend the rest of his life helping others.

He filed for personal bankruptcy in 2002 and didn't emerge for seven years, prosecutors said.

The company, which through subsidiaries sells automotive chemical products, filed for bankruptcy in 2009 and remains in business. The new management has filed court papers seeking to get money back from more than 100 people and entities it says got stock or otherwise were involved in the scheme.

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