AIG Ex-CEO Greenberg Faces January Trial in Loss Reserving Lawsuit

By | July 30, 2014

Maurice “Hank” Greenberg, the former chairman of American International Group Inc., will go on trial in January after more than nine years of legal jousting over former New York Attorney General Eliot Spitzer’s lawsuit accusing him of fraud.

The state claims Greenberg, 89, and former AIG Chief Financial Officer Howard Smith bear responsibility for allegedly sham transactions with General Reinsurance Corp. in 2000 and 2001 that inflated AIG’s loss reserves by $500 million.

New York State Supreme Court Justice Charles Ramos in Manhattan today scheduled a trial to start the week of Jan. 19 after the two sides exchange lists of potential experts and witnesses.

New York Attorney General Eric Schneiderman is seeking to bar the men from participating in the securities industry or serving as directors or officers of a public company, after his office had dropped a claim for damages.

Matt Mittenthal, a spokesman for Schneiderman, declined to comment on the trial date today in an e-mail.

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. Spitzer sued Greenberg and Smith in May 2005.

Greenberg unsuccessfully argued that the lawsuit was fatally flawed after a court approved a $115 million settlement of a shareholder class-action lawsuit against him and Smith. He has said the state’s claim are without merit.

David Boies, an attorney representing Greenberg with Boies, Schiller & Flexner LLP, declined to comment after today’s hearing.

The case is State of New York v. Greenberg, 401720-2005, New York State Supreme Court, New York County (Manhattan).

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Topics Lawsuits Profit Loss New York AIG

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