Ex-American International Group Inc. Chairman Maurice “Hank” Greenberg said New York State’s pursuit of him through a decade-old fraud lawsuit is a futile waste of taxpayer money, as the two sides prepare for a trial next month.
The case, filed in 2005, is one of the “last vestigial byproducts” of the tenure of then-Attorney General Eliot Spitzer, lawyers for Greenberg, led by David Boies of Boies Schiller & Flexner LLP, said in a statement Thursday. “The citizens of New York should be concerned that the state’s chief legal officer is continuing to waste taxpayers’ resources in a futile pursuit” of Greenberg and ex-AIG Chief Financial Officer Howard Smith.
The parties are set to file pretrial memorandums in New York State Supreme Court in Manhattan on Thursday, and the nonjury trial is scheduled to start Feb. 24 before Justice Charles Ramos. The state, whose case is now led by Attorney General Eric Schneiderman, claims Greenberg and Smith are responsible for sham transactions with General Reinsurance Corp. in 2000 and 2001 that inflated AIG’s loss reserves by $500 million.
Greenberg, 89, has said the state can’t prove the two men are liable, is seeking “meaningless relief” and has no evidence he or Smith was aware of or knowingly participated “in any alleged impropriety” over accounting for the transactions.
Greenberg stepped down as AIG’s chief executive officer in March 2005, the same month the New York-based insurer said the transaction with Gen Re was improper. He had led the company since 1967 and built it into the world’s largest insurer. AIG paid $1.6 billion to settle regulators’ claims, and Spitzer sued Greenberg and Smith two months after that.
Matt Mittenthal, a spokesman for Schneiderman, said in a statement Thursday that Greenberg and Smith “knowingly orchestrated two major frauds” that led to their ouster.
Schneiderman is seeking disgorgement of cash bonuses they received and wants to bar the men from participating in the securities industry or serving as officers or directors of public companies.
“For both alleged frauds — a phony $500 million reinsurance deal with Gen Re, and a scheme to hide $200 million in underwriting losses –- we will prove that the illegality was obvious to Greenberg and Smith, who either directed or were personally involved in both of them,” Mittenthal said.
The case is State of New York v. Greenberg, 401720-2005, New York State Supreme Court, New York County (Manhattan).