Chicago Sun Times – Chicago-based hedge fund Citadel Investment Group turned up on American International Group Inc.’s list of firms it paid using proceeds from the federal government.

AIG, which has received $173 billion in aid from Washington, disclosed recipients of $52 billion it received from September to the end of 2008. Citadel received $200 million from AIG’s securities lending program.

The program invested in mortgage-backed securities and sustained billions of dollars in losses when housing values fell.

Citadel, like other hedge funds, borrows securities in attempts to increase profits from trading strategies. It was among the smallest of the AIG recipients.

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