Yesterday, Manhattan Supreme Court Justice Charles Ramos had ruled that the case filed by the New York attorney general against former chairman of American International Group Inc Maurice "Hank" Greenberg over alleged sham transactions that were designed to pad the insurer's financial health.
In his decision, Ramos explained, "This action has been pending for eight years, meandering through a series of seemingly never-ending motions and appeals. The determination of the issues remaining in this action must be tried."
The case was pursued by former Attorney General Eliot Spitzer in 2005, which resulted to the forced resignation of Greenberg from his post, Bloomberg said. Greenberg has been largely credited for building the company into the largest insurer in the world in the last four decades.
According to the 2005 lawsuit, the 89 year-old and former AIG Chief Financial Officer Howard Smith were the ones to blame for the sham transactions AIG had with General Reinsurance Corp. in 2000 and 2001, which resulted to AIG's loss reserves ballooning by half a billion dollars. Greenberg, who has long been arguing fo the dismissal of the lawsuit, said that the legal action was fatally flawed after a court had approved a $115 million settlement of a shareholder class-action lawsuit that was filed against him and Smith. Moreover, both Greenberg and Smith had been seeking a ruling that would dismiss the case against them as the state's case has changed too much.
In a statement made also yesterday, the office of New York Attorney General Eric Schneiderman has reassured that the state is seeking to ban the two men from participating in the securities industry or from serving as officers or directors of a public company.
"We look forward to moving toward a trial that will finally offer the opportunity to hold Mr. Greenberg accountable for his alleged role in a massive fraud," spokesman Matt Mittenthal said on behalf of Schneiderman.
