| NEW YORK
NEW YORK May 28 A New York state judge has
rejected a request by Maurice "Hank" Greenberg, the former
American International Group Inc chief executive
officer, to dismiss a long-running civil lawsuit by the state's
Greenberg, now 89, and former AIG Chief Financial Officer
Howard Smith were accused in the 2005 case of engineering sham
transactions, including with the General Re Corp reinsurance
unit of Warren Buffett's Berkshire Hathaway Inc, to
make AIG's financial health look better.
This alleged accounting fraud led to a $3.9 billion
restatement, which predated the insurer's $182.3 billion federal
bailout stemming from the 2008 financial crisis.
David Boies, a lawyer for Greenberg, said his client plans
to appeal. Vincent Sama, a lawyer for Smith, did not immediately
respond to a request for comment.
Justice Charles Ramos of the Manhattan state supreme court
on Wednesday rejected the defendants' arguments that state law
barred Attorney General Eric Schneiderman from seeking to recoup
some of their pay, and ban them from the securities industry and
from serving as officers or directors of public companies.
The judge also said arguments that the defendants "pose no
threat to the New York public" because they do not lead public
companies or plan to publicly sell securities involve issues of
fact to be resolved at a trial, which would not have a jury.
"The issues remaining in this action must be tried," Ramos
The lawsuit was first brought by Eliot Spitzer, then the
state's attorney general, and has been continued by his
successors, Andrew Cuomo and now Schneiderman.
Matt Mittenthal, a spokesman for Schneiderman, said: "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."
Last June, New York's Court of Appeals, the state's highest
court, also let the case go forward, even though Schneiderman
had earlier in the year dropped damages claims worth a potential
"We have no difficulty in concluding that, in this civil
case, there is evidence sufficient for trial that both Greenberg
and Smith participated in a fraud," the appeals court wrote.
Greenberg now runs privately held C.V. Starr & Co. Buffett
was not implicated in wrongdoing.
The case is People v Greenberg, et al, New York State
Supreme Court, New York County, No. 401720/2005.
(Reporting by Jonathan Stempel in New York; Editing by Tom