Yesterday we laid out some preliminary evidence that AIG execs -- led by Joseph Cassano, who ran the firm's financial products unit -- may have committed criminal fraud in connection with those credit default swaps that brought the company down. And as we noted, federal investigators have been probing that very question.

A former federal fraud prosecutor confirmed to TPMmuckraker today that criminal fraud occurs when someone willfully misstates the facts about a company's position in any public statement -- such as an SEC filing, an earnings release, a presentation to investors, or even a press conferences -- and when there's a clear financial motive for doing so. The former prosecutor further confirmed that the facts of the AIG case as currently known -- in which Cassano and other AIG execs made what turned out to be incorrect public statements, which had the effect of concealing from investors the company's true exposure to losses on its swaps -- could potentially lead to such charges, but declined to go further without access to the details of the investigation.

It's also worth noting that two recent high-profile financial fraud prosecutions were built on exactly that issue.

In 2004, prosecutors charged Bernie Ebbers, the former the CEO of WorldCom, of "'knowingly and consistently' manipulating financial results at WorldCom to present the company in a better light to Wall Street analysts, investors and regulators during the stock market boom of the 1990s," as CNNMoney.com put it at the time. The charges included seven counts of filing false statements with securities regulators.

Ebbers was convicted on all counts in 2005, and is currently serving a 25-year prison sentence.

And in 2006, Enron founder Ken Lay was convicted, along with the firm's former CEO Jeff Skilling, of lying to Enron employees and the public as part of a conspiracy to hide the deteriorating position of the company. Lay died of a heart attack a few months later.

As we showed yesterday, Cassano, along with then-AIG CEO Martin Sullivan, made some similarly rosy public representations about the firm's exposure to losses in its financial products unit. That included one presentation to investors that took place in December 2007 -- months after AIG's counterparties began demanding (sub. req.) that AIG put up collateral to cover its credit default bets -- in which Cassano confidently declared "it is very difficult to see how there can be any losses in these portfolios." Federal investigators are reported to be looking especially closely at that presentation.

Of course, statements like this and others later proved to be catastrophically wrong. But in order to build a credible case, prosecutors would need to establish that the execs knew the statements to be false when they made them, and that the statements were specifically designed to hide the truth, in order to enrich those who made them.

That's a high bar to meet. But not so high as to prevent Cassano, according to one Wall Street Journal report (sub. req.), from hiring a lawyer in connection with the probe.