EXCLUSIVE: Ex-AIG unit head Cassano back in U.S.

By Lilla Zuill and Grant McCool

WESTPORT, Conn./NEW YORK (Reuters) - Joseph Cassano has come home to face the music.

The former AIG executive closely associated with one of the most sensational collapses in corporate history, recently slipped back into the United States.

Under intensifying investigations by the FBI and other agencies, the 54-year-old Cassano had until recently been living in London.

It was from there that he ran the AIG Financial Products business that triggered most of the insurer's massive losses and threatened to crash the global financial system until the U.S. government stepped in with a $182 billion bailout.

But now he and his wife, Ellen Hooker, have left the posh home originally leased for him by American International Group Inc in the tony Knightsbridge area of London, close to Harrods department store, and returned to live in his clapboard house in bucolic Westport, Connecticut.

It is a short drive away from the financial products unit's U.S. offices in Wilton and is in an area that only six months ago was the scene of protests outside the homes of AIG executives (though not Cassano's) by activists angered at the company's decision to grant them $165 million in bonuses.

Populist outrage at the bonuses, much of which were eventually returned, even led to death threats being made to some of the executives.

The return of the former executive, who was described by the author Michael Lewis in an article in Vanity Fair in August as being "as responsible for a series of disastrous trades as a person in a big company can be," will surprise some.

There had been speculation he would remain in London to hide from criticism in the United States and to distance himself from the investigation.

But his attorney, Joseph Warin, says Cassano, who has not been working since the ending of a $1 million-a-month consulting agreement with AIG around the time of last September's bailout, always intended to return to the United States.

"Despite what you have read, Joe owns no house in London. His house is here and it is where he lives. He is not ducking anyone," said Warin.

Cassano was among a group of traders from investment bank Drexel Burnham Lambert to join AIG and set up the financial products business in 1987 and he took control of the operation in 2001. Drexel Burnham collapsed in 1990 after it was enveloped in a securities scandal related to its dominance of junk bond trading.

He is fully cooperating with all investigations into the losses at AIG Financial Products, according to his attorney.

"We are working hard to make sure they (prosecutors), have all the facts," Warin said. "When all the facts are known, we are confident that the authorities will see that his actions were appropriate."

HOUSE IS MODEST