Opening arguments are set to begin on Tuesday in the trial of former American International Group chairman Maurice “Hank” Greenberg over accounting fraud at the insurance giant some 16 years ago.
Greenberg, 91, is facing civil charges of orchestrating a $500 million transaction to conceal the insurer’s financial difficulties from shareholders. He is expected to testify during the trial.
The case, filed by then-New York attorney general Eliot Spitzer in 2005 and which also names former AIG chief financial officer Howard Smith as a defendant, did not go to trial for more than a decade, thanks to legal wrangling that twice made its way to the Court of Appeals, the state’s highest court.
New York attorney general Eric Schneiderman has said he continued to pursue the case to show “no one, no matter how rich or powerful can evade responsibility for misconduct.”
David Boies, Greenberg’s lawyer, plans to argue the lawsuit was politically motivated.
“This case was brought by Eliot Spitzer expressly because he was angry at Hank Greenberg,” Boies said in an interview on Monday. He plans to enter evidence that Spitzer was irate about statements Greenberg made about the attorney general’s overly aggressive approach towards alleged corporate misconduct.
Greenberg and Smith tried for years to have the case thrown out as having no merit, but the Court of Appeals said there was enough evidence to proceed to trial.
Greenberg nearly settled the case in 2008 with a $100 million gift to charity, Boies said, but the market crashed that September along with the value of Greenberg’s AIG stock holdings.
Damages are no longer on the table after Greenberg, Smith and other executives separately reached a $115 million settlement with AIG shareholders, but the Court of Appeals ruled in June that Schneiderman could seek to recoup millions in bonuses paid to the defendants during the time the alleged fraud took place.
Justice Charles Ramos of New York state court in Manhattan will decide the non-jury case, which may run into early next year with breaks between trial dates. Some 20 to 25 witnesses are expected to testify, according to Boies.
Greenberg led AIG for four decades before he was ousted in 2005. The following year, AIG paid $1.64 billion to settle federal and state probes into its business practices.