New York's highest court again rejected a bid by former American International Group Inc. Chairman Maurice "Hank" Greenberg to dismiss the state's decade-old fraud suit against him, clearing a path for a trial.
Greenberg, 91, stepped down as chief executive officer of AIG in March 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.
Greenberg and former AIG Chief Financial Officer Howard Smith were sued the next month by then Attorney General Eliot Spitzer under the state's Martin Act, an almost century-old law that gives prosecutors the power to probe investment frauds, Ponzi schemes and other forms of white-collar crime.
Spitzer alleged Greenberg and Smith were responsible for transactions to hide a decline in the company's loss reserves and mischaracterize underwriting losses. Since then, Greenberg has faced off against three successive attorneys general in the case, which was set to go to trial in June 2015 before an appeals court in Manhattan sent it to the state's high court in Albany for review.
The lawsuit will return to New York State Supreme Court Justice Charles Ramos in Manhattan for trial. Greenberg said in a statement that Thursday's decision fails to address his main argument on appeal — that the relief sought by the attorney general is barred by settlements with AIG and the Securities and Exchange Commission.
Considering Options
Greenberg "is considering his options in light of this decision, which he believes flies in the face of both the court's own precedent and federal law." In a statement, Attorney General Eric Schneiderman said he was "very pleased the people of New York will finally have a chance to obtain justice at trial."
"We look forward to demonstrating that Mr. Greenberg and his associates orchestrated two major frauds that caused massive losses to A.I.G.'s shareholders," he said.
Greenberg had argued that the Martin Act and another state law didn't allow the attorney general to seek to bar him or Smith from the securities industry, ban them from serving as officers or directors of public companies and ask for repayment of wrongfully obtained profits.
