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Guilty Pleas in Scheme to Defraud AIG, Deutsche Bank

Source: WSJ

Posted on 07 Mar 2012

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A former American International Group Inc. executive and her ex-husband have pleaded guilty in an alleged conspiracy to divert hundreds of thousands of dollars of money from the insurer and Deutsche Bank AG to sham marketing firms.

Federal prosecutors had accused Heidi Walker, a former executive at Deutsche Bank's asset-management unit and AIG's Global Investment Group, of creating fake invoices in order to divert funds to marketing companies run by her then-husband, Peter Pfabe, between 2002 and 2008. The money was allegedly used to pay for personal expenses and expenses related to their horse farm in Salt Point, N.Y.

No services were rendered to Deutsche Bank or AIG and her husband's involvement wasn't disclosed to either company, prosecutors said. Ms. Walker and Mr. Pfabe were originally charged in October 2010.

On Tuesday, Ms. Walker, 47 years old, and Mr. Pfabe, 52, pleaded guilty to conspiracy to commit mail fraud and wire fraud. They agreed to pay restitution and to forfeit $200,000 as part of their plea.

Sentencing is set for June 28. They face up to five years in prison.

Lawyers for Ms. Walker and Mr. Pfabe didn't immediately return phone calls seeking comment Wednesday.

AIG declined to comment. Deutsche Bank also declined to comment, but previously said it had cooperated with the investigation.