In what an attorney calls a story of "anger, betrayal and cover-up," we are learning that former American International Group (NYSE: AIG) CEO Maurice "Hank" Greenberg may have taken $4.3 billion in stock from the company in 2005.

This "withdrawal" reportedly occurred shortly after Greenberg was forced out of the company as he was being investigated for accounting irregularities. Attorney Theodore Wells told a jury in Manhattan yesterday that Greenberg "was mad. He was angry," deciding to give the okay to tens of millions of shares being sold from a trust fund shortly after being jettisoned from the company. The fund was put together to provide incentive bonuses to a group of AIG management and employees that they would receive when they retired.

Former American International Group (NYSE: AIG) head honcho Hank Greenberg is selling his entire stake in the company -- just under 12.9 million shares -- to Starr International for at least $1.25 per share. The price will be set based on the closing price the day before the sale, but a clause in the deal prevents it from being less than that.

Who is Starr International? Glad you asked. Starr International is a privately held investment vehicle the operates for the benefit of Mr. Greenberg's charitable ventures. The Wall Street Journal reports (subscription required) that "In addition to buying Mr. Greenberg's shares, Starr International would purchase 25.3 million shares in AIG from an entity called the Greenberg Joint Tenancy Co., 10.5 million shares from C.V. Starr & Co., another firm that Mr. Greenberg heads, and other shares from affiliated entities."

As the sordid tale of Bernard Madoff continues to unspool, it has become increasingly clear that somebody -- in fact, a lot of somebodies -- were asleep at the switch. Beyond the standard warning signs, like Madoff's incredible secrecy, his surprisingly consistent rate of return, and the clubby nature of his selling staff, there were far more obvious portents. For example, Madoff's chief compliance officer was his brother Peter, and one of the compliance attorneys was his niece. For that matter, the fact that Harry Markopolos, a Boston accountant, has been urging the SEC to investigate Madoff for the last nine years should have been a hint. The same, of course, goes for the 2006 SEC investigation that found violations, but didn't feel obliged to take any substantive action.

As the SEC attempts to assign blame in finest Three Stooges form, it's worth noting that this is hardly the first time that a lack of serious governmental regulation has reared its ugly head this year. At the moment, mobs are currently clamoring for Dick Fuld's head, with a healthy side order of Hank Greenberg, John Thain, John Mack, Lloyd Blankfein, Jimmy Cain, and pretty much everyone who works in New York's financial district. The general perspective seems to be that these men engaged in business practices that ran the gamut from risky to actionable and now should be forced to pay for the economy that they have ruined.

This post is part of our feature on Money Losers of 2008. See all 20.

There's no doubt about it -- times are tough. People are struggling to find work and to pay the bills as the value of their homes and savings dwindle. The poor get poorer, and the rich get richer.

Or do they? It's all relative, of course, but world's billionaires have been taking some big hits too. We take a look at Sheldon Adelson, Kirk Kerkorian, and Lakshmi Mittal in their own separate posts, but here are some other billionaires who have lost billions this year (courtesy of Forbes and Business Sheet).

• Brothers Anil and Mukesh Ambani of India's private conglomerate Reliance lost $32.5 billion and $28.2 billion, respectively.
• Warren Buffett, the Sage of Omaha, lost $16.5 billion. Shares of Berkshire Hathaway Inc. (NYSE: BRK.A) are down about 32% since the beginning of the year.
• Microsoft (NYSE: MSFT) founders Bill Gates and Paul Allen lost $12.3 billion and $2.6 billion, respectively, while CEO Steve Balmer lost $6.5 billion. Shares of Microsoft are down 46% since the beginning of the year.
• Larry Page and Sergey Brin, cofounders of Google Inc. (NYSE: GOOG), lost $11.9 billion and $11.7 billion, respectively, and CEO Eric Schmidt lost $3.8 billion. The share price of Google has fallen 55% since the beginning of the year.
• Larry Ellison, CEO of Oracle Corp. (NASDAQ: ORCL), lost $8.2 billion. Shares of Oracle are down 21% since the beginning of the year.
• Media maven Sumner Redstone lost $7.2 billion. Shares of his private investment firm National Amusements fell 70% this year.

The credit crisis is turned some of the super-rich into the super-poor.

When AIG (NYSE: AIG) was trading for $70 the share former CEO Hank Greenberg and his affiliates had about $20 billion in the stock. Now that number is probably less than $1 billion. AIG now trades around $3.

According to The Wall Street Journal, "Mr. Greenberg said in a Securities and Exchange Commission filing earlier Thursday that he intended to engage in open-market sales of AIG shares for liquidity and other purposes."

Liquidity indeed. The lifestyles of many billionaires includes hundreds of millions of dollars in donations to charities, multiple homes, art collections, and even a private jet. Yesterday former Lehman CEO Dick Fuld began the process of auctioning off his art collection. Being very rich is not what it used to be.

The news about Greenberg and Fuld points to a new wrinkle in the economic crisis. The trouble may not just bring down some of the nation's leading financial companies. It may make some of the country's most wealthy people bankrupt.

Greenberg is in his early 80s. That makes starting all over again pretty tough.

Douglas A. McIntyre is an editor at 24/7 Wall St.

TheStreet.com's Jim Cramer says the intervention will help all financials worldwide.

How about this? We are better off than we were yesterday.

You have to understand that we simply wouldn't be able to open most financials if AIG (NYSE: AIG) (Cramer's Take) had failed. Our new sovereign wealth fund, the Federal Reserve, came up with an elegant plan to take over AIG and make good on what would have been broken guarantees that would have caused worldwide capital calls and bank closings that honestly would have made the Great Depression seem like the Little Depression, World War I to our new World War II. That's worth avoiding.

It's hard to rally on this. People are still reeling from the enormity of it and the fragility that we didn't know about. I am actually pleasantly surprised that the Fed recognized that we had a problem this size on our hands.

You have to look at this only one way: Without this nationalization, we might not have had banks paying off other banks. We would have a seize-up and a destruction of capital that we simply couldn't handle.

Now we are going to rebuild on a firmer basis.

MAJOR PAPERS:

• The Wall Street Journal's "Smartmoney Stock Screen" looks at eight companies whose valuations make them ripe to buy, and they also may be in the sites of corporate buyers. The big eight include Asbury Automotive Group Inc (NYSE: ABG), Crane Company (NYSE: CR), Scholastic Corporation (NASDAQ: SCHL) and The Scotts Miracle-Gro Company (NYSE: SMG).
• The Wall Street Journal's Walter Mossberg said in the "Personal Technology" column that he cannot recommend Apple Inc's (NASDAQ: AAPL) MobileMe, as it has "too many flaws to keep its promises".
• The Wall Street Journal also speculated that the collapse this week of SemGroup LP, which is the parent of SemGroup Energy Partners LP (NASDAQ: SGLP), may have played a role in the 14% drop in crude oil over the past 10 days.
• In a move that could take advantage of the gap in the financing markets, The Goldman Sachs Group Inc (NYSE: GS) raised $10B to invest in loans backing leveraged buyouts. The fund will reportedly buy senior loans, the Financial Times reported.

OTHER PAPERS:

• Former American International Group Inc (NYSE: AIG) chief Hank Greenberg is reportedly in settlement talks with New York Attorney General Andrew Cuomo over charges that Greenberg improperly inflated corporate books to show improved profits, the New York Post said.

I'm not sure how management at Lehman Brothers Holdings Inc. (NYSE: LEH) has time to run the business. What's more, with all the turbulence, I'm wondering if many of the employees are working mostly on parsing rumors and fine-tuning resumes.

Of course, this week Lehman got rid of its CFO, Erin Callan and president, Joseph Gregory. The company also raised $6 billion, which was quite dilutive. So from Monday to Friday, the stock price plunged from $33 to $25.81.

Yet, by Friday, things were perking up. The stock price shot up 13.7%. Maurice "Hank" Greenberg, the, who is the former CEO of AIG (NYSE: AIG), said he bought shares. This was also the case with BlackRock (NYSE: BLK) and Putnam Investments.

But there was something else: Wall Street was abuzz with buyout rumors.

In fact, according to a report from CNBC, it looks like the senior management team of Lehman is meeting this weekend (which is a rare thing). Are they talking to possible suitors? Or, is it to review the figures for Q2? Both?

Despite all this, the fact remains that Lehman's potential suitors are also distressed. So, even if there is a deal, the valuation is likely to be muted.

But there is an interesting scenario: Blackstone Group LLP (NYSE: BX) as a buyer or major investor. The firm is well capitalized and may want an investment banking platform. Moreover, the firm's cofounders -- Stephen Schwarzman (CEO) and Peter Peterson (Senior Chairman) -- were formerly with Lehman (back in the 1980s).

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Former American International Group (NYSE: AIG) CEO Hank Greenberg has received a Wells Notice from the SEC, indicating that the commission may file civil charges against him. The lawsuit, if filed, would center around fraudulent transactions the company conducted with General Re in an effort to artificially inflate its earnings.

Greenberg's lawyer said in a statement that the Wells Notice "is a step in the process....We remain confident of our position on the merits, and we believe that none of the remaining issues are material to AIG's financial statements. When the commission has had the opportunity to consider all the facts, we believe that they will agree."

A lawsuit from the SEC involving securities fraud would likely make Greenberg's efforts to exert more influence over the company he ran for more than 30 years difficult. He has been increasingly critical of AIG's management in recent months.

Our own Doug McIntyre recently commented that Greenberg is fooling himself if he thinks he's the company's savior. Referring to the company's first quarter loss of $7.8 billion, he wrote that "Greenberg dreams that things would have been different if he had stayed as CEO, but it is only a dream that he cannot support with any reality."

MAJOR PAPERS:

• The Wall Street Journal reported that a federal judge said that the government had "sufficient evidence" for a jury to conclude that a conspiracy to fraudulently boost the financials of American International Group Inc (NYSE: AIG) began with former CEO Maurice R. "Hank" Greenberg. That led to a transaction that artificially inflated AIG's loss reserves.
• Citigroup Incorporated's (NYSE: C) Falcon Strategies fixed income hedge fund is down 75%, the Wall Street Journal reported, bad news for the three U.S. banks that invested in it to help increase returns on employee life insurance. One of the banks, Fifth Third Bancorp (NASDAQ: FITB), is suing Transamerica Life and Smith Barney, both of whom helped to arrange the investment, and some are now questioning whether Citigroup will be forced to give back some of the investments as they have with individual investors.
• After it stopped offering some mortgages last month because it was swamped by volumes of new applications, the Financial Times reported that First Direct, a unit of HSBC Holdings Plc (NYSE: HBC), has resumed lending to new customers. The bank said it has continued to receive "significant interest" in its mortgages from existing customers.

OTHER PAPERS:

• In an effort to raise capital from shareholders, the Telegraph reported that Barclays Plc (NYSE: BCS) is considering a takeover bid for a rival in the U.S. or UK. Sources believe Barclays may attempt to acquire an investment bank, a struggling bank or a deal in a fast-moving economy. Potential names mentioned include UBS AG (NYSE: UBS) and Lehman Brothers Holdings Inc (NYSE: LEH).

Hank Greenberg, the former CEO of AIG (NYSE: AIG), built the company from a modest insurance firm to one of the largest financial services businesses in the world. Then, Eliot Spitzer went after him and Greenberg was forced out. He has been trying to get back in ever since.

Through his own holdings and those of a foundation he controls, Greenberg has enough shares to make trouble for AIG, and now he may have cause. The company lost $7.8 billion in the last quarter. Greenberg insists that if he had been in charge, none of that would have happened.

According to The Wall Street Journal, Greenberg has "upped the pressure on current management in a sharply worded letter that said 'AIG is in crisis' and called on directors to postpone Wednesday's annual meeting."

Greenberg's view is somewhat convenient. The company started selling derivatives when he was still there. His attack on management assumes that he could have escaped the problems that have hit almost every major financial company in the US and Europe.

Greenberg dreams that things would have been different if he had stayed as CEO, but it is only a dream that he cannot support with any reality.

Douglas A. McIntyre is an editor at 247wallst.com and the author of the Ten Stocks Under $10 letter.

MAJOR PAPERS:

• Lockheed Martin Corporation (NYSE: LMT) is expected to beat out The Boeing Company (NYSE: BA) for an approximate $1.8B contract to from the U.S. Air Force to build a new generation of navigation satellites, the Wall Street Journal reported.
• According to the Wall Street Journal, former American International Group Inc (NYSE: AIG) CEO Maurice R. "Hank" Greenberg is pressing the troubled insurer to turn the company around. He says that he and other major shareholders have "deep concern about the persistent and seemingly endless destruction of value at AIG."
• Hybrid Capital Second, a Morgan Stanley (NYSE: MS) investment vehicle, increased its stake in internet start-up Livedoor to 18.15% from 12.76% in March, the Financial Times reported, superseding the company's founder, Takafumi Horie.

OTHER PAPERS:

• After it incurred $3.2B of bad debts in the first three months of the year, the Telegraph reported that Knight Vinke, an HSBC Holdings Plc (NYSE: HBC) shareholder, has renewed calls for the bank to shed its U.S. consumer finance business.

AIG (NYE: AIG) was the most respected insurance firm in the world when it was run by Hank Greenberg. But he is gone, along with the respect.

AIG managed to lose $7.8 billion in the last quarter, an impressive amount even by the standards of current bank and brokerage deficits. According to The Wall Street Journal, "The giant insurer also announced that it would raise $12.5 billion in capital to replenish its balance sheet."

Of course, the reason for the losses was, among other things, investment in instruments based on mortgages.

One odd piece of news that came out of the awful quarter from the insurance firm was that it would raise its dividend. It is hard to imagine where that cash will come from.

The smoke signal sent up by AIG is that the crisis involving US financial firms is not over. AIG did not say that the future was bright and the sun was coming out from behind dark clouds. Pessimism was the emotion of the day.

Watch for more big losses from banks and brokerage in the second quarter. AIG is a canary in a coal mine.

Douglas A. McIntyre is an editor at 247wallst.com.

TheStreet.com's Jim Cramer says AIG's Sullivan joins the "formers" at Citi and Marsh & McLennan as Eliot Spitzer's appointee failures.

Three strikes, and Spitzer's guys should all be out.

That's my thoughts about this Martin Sullivan/AIG (NYSE: AIG) (Cramer's Take) scandal. Remember that Sullivan was basically appointed to run AIG by Eliot Spitzer after he kicked out Hank Greenberg for a laundry list of bad deeds. Just like Chuck Prince was appointed to run Citigroup (NYSE: C) (Cramer's Take) when Spitzer booted Sandy Weill, and Mike Cherkasky was appointed to run Marsh & McLennan (NYSE: MMC) (Cramer's Take) when Spitzer axed Jeffrey Greenberg.

All three men were brought in to clean up the mess. Both Prince and Cherkasky were lawyers who were way over their heads as operators.

Prince presided over the destruction of a great American bank -- although it was kind of a re-destruction in light of how bad it was in 1990 -- when he allowed billions in off-balance-sheet borrowings that he simply did not understand.

Hank Greenberg is an old man now. His stated age is 82, but he must be closer to 90. He was the CEO of American International Group (NYSE: AIG) from 1967 until 2005. He was pushed out because of an accounting scandal and federal prosecutors are still looking into that.

But Greenberg does not want to take his hundreds of millions of dollars and retire. In a filing with the SEC yesterday he was pushing for "strategic changes" at the big insurance company and perhaps the spin-off of some businesses. Through various funds and foundations, Greenberg controls over 13% of AIG's shares and the filing with the government states that he "believes that there are opportunities to significantly improve [AIG's] performance and strategic direction, as well as the value of their investment." The Wall Street Journal writes that (subscription required) Greenberg and the funds he controls "anticipate holding discussions with stockholders and third parties that may address a number of issues," including whether to spin off some operations, and "concerns over the direction and management of [AIG] generally."

In his desire to exert some control over his old company, Greenberg may get himself into more hot water. AIG has already filed a suit against him for damaging the company. Lashing out at AIG will clearly make the government look harder at its case against him. Prosecutors certainly don't want more headlines about the fight between the man who made AIG and the company itself. The government would not want it to appear that they aren't addressing problems at AIG in a timely fashion.

Greenberg does have at least one leg to stand on. AIG shares are down over 10% in the last two years while the S&P is up almost 30% If the old man can get the company's board to take action by raising its dividend or buying back shares, it might drive the stock back up.

Greenberg. Old but not yet infirm.

Douglas A. McIntyre is an editor at 247wallst.com.