The U.S. Supreme Court turned away an appeal by Maurice “Hank” Greenberg, refusing to derail a fraud lawsuit by New York state against the former American International Group Inc. chairman.
Three months after a trial in the case began in state court in Manhattan, the justices said they wouldn’t hear contentions by Greenberg and former AIG Chief Financial Officer Howard Smith that federal securities law bars the case from going forward.
Greenberg and Smith are fighting allegations that they used two sham transactions to hide the insurer’s true financial condition. The trial began in September, more than 11 years after former New York Attorney General Eliot Spitzer filed suit.
The New York Court of Appeals, the state’s highest court, let the trial go forward in June, rejecting arguments by the two former executives. New York Attorney General Eric Schneiderman urged the Supreme Court not to hear the appeal.
Greenberg, 91, stepped down as chief executive officer of AIG in 2005 after building it into the world’s largest insurer over four decades. Shortly thereafter, company officials said one of its transactions was improper, restated its earnings by $3.4 billion, and paid $1.6 billion to settle claims by regulators.
The case is Greenberg v. New York, 16-284.
The case in New York has gone into mediation. Justice Charles Ramos of New York state court in Manhattan presiding over the civil suit against Greenberg and Smith has agreed to an adjournment until January to allow the parties to pursue mediation, according to the office of New York Attorney General Eric Schneiderman.
“Now that the State has presented nearly all of its case in open court, the parties have agreed that now is a natural point to explore a final resolution through mediation. To facilitate the mediation, the Court has granted the parties’ joint request for an adjournment until January,” the attorney general’s office confirmed to Insurance Journal.