Former AIG boss Hank Greenberg is to go on trial in NY this week over a decade after civil charges were filed. Berkshire isn’t named as a defendant in the lawsuit. The state alleges Mr. Greenberg enmeshed himself “to an extraordinary degree” in aspects of how the auto-warranty losses could be mitigated.
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Greenberg and Smith continued to fight to have the suit thrown out over the next decade, while Spitzer’s successors as the state’s top prosecutor – first Andrew Cuomo before he was elected governor and now Eric Schneiderman – kept pushing for a trial.
A settlement of class-action litigation by AIG shareholders against Greenberg was approved by a federal court in 2013.
Neither of the accused have admitted or denied the SEC’s complaint. A source familiar with the matter says the lack of success is in part due to the initial claim being too high.
The case is State of NY v. Greenberg, 401720-2005, NY state Supreme Court (Manhattan).
Boies will argue that the lawsuit was politically motivated.
The two claims that will be dissected in coming days are what remains of a wide-ranging civil suit filed by Mr. Spitzer in 2005, in one of his highest-profile moves just before his successful run for NY governor in 2006.
In an interview on Monday, September 12, Boies said, “This case was brought by Eliot Spitzer expressly because he was angry at Hank Greenberg”. He plans to enter evidence that Mr Spitzer was irate about statements Mr Greenberg made about the attorney general’s overly aggressive approach towards alleged corporate misconduct.
However, the Court of Appeals said there’s enough evidence for the trial to proceed.
In 2008, the case was nearly settled by Greenberg giving $100 million to charity, but that September the market crashed along with the value of his AIG stock holdings. The case has gone through at least seven pretrial appeals, concluding with the New York Court of Appeals’ June ruling that the state can pursue disgorgement worth more than a $53 million total from the two.
If found liable by Judge Charles Ramos in the nonjury trial, the 91-year-old could be ordered to forfeit past bonuses totaling millions of dollars, plus interest, and be barred from the securities industry as well as from serving as a public-company officer or director. According to Boies, between 20 and 25 witnesses are expected to take the stand.
Greenberg, who is 91, led AIG for four decades before he was forced out of the company in 2005.
Greenberg and Smith had resigned earlier that year amid an accounting scandal, and New York-based AIG then restated its earnings, lowering them by $3.4 billion and agreeing to pay $1.64 billion to settle the claims without admitting or denying wrongdoing.
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The case is People v Greenberg et al, New York State Supreme Court, New York County No. 401720-2005.
