Ex-AIG chief Greenberg can pursue Spitzer defamation lawsuit

NEW YORK, Sept 14 (Reuters) - Maurice “Hank” Greenberg, former chief executive of American International Group Inc , may pursue large parts of his defamation lawsuit against former New York Attorney General Eliot Spitzer, a New York state appeals court ruled.

Wednesday’s decision by the Appellate Division in Brooklyn, New York came seven months after Greenberg, 92, reached a $9 million settlement with Eric Schneiderman, the current state attorney general, of civil accounting fraud charges first brought by Spitzer in 2005.

The complaint “adequately stated that Spitzer acted with actual malice” in criticizing Greenberg, with a goal of damaging Greenberg’s reputation and career while bolstering his own, Justice Cheryl Chambers wrote for a four-judge panel.

Greenberg and Spitzer had been appealing a June 2014 lower court ruling letting Greenberg pursue part of his case against Spitzer, his longtime nemesis. The appeals court restored some claims that had been dismissed.

“We are, of course, pleased with the appellate court’s decision, which will now permit Mr. Greenberg’s claims to proceed to trial,” Greenberg’s longtime lawyer, David Boies, said in an email.

Spitzer’s lawyer was not immediately available for comment on Thursday.

Greenberg objected to statements Spitzer made in television interviews in 2012 and a book, “Protecting Capitalism Case By Case,” in 2013.

He said the statements falsely implicated him in fraud at AIG, and suggested he was “removed” or “thrown out” by the insurer’s board because of his role, among other allegations.

The appeals court said Spitzer’s background as attorney general could have left listeners “less skeptical” and “more willing” to believe him, including when he told then-CNBC anchor Maria Bartiromo that “Hank Greenberg at AIG committed fraud. The record on that is indisputable.”

It said the lower court judge erred in dismissing claims over Spitzer’s statements tying Greenberg’s 2005 exit from AIG to fraud there, citing a lack of evidence of such a link.

AIG paid $1.64 billion in 2006 to settle regulatory probes into its business practices. Two years later, it received what became a $182.3 billion bailout by the federal government.

In May, a federal appeals court said the bailout was legal and that Greenberg’s Starr International Co, a big AIG shareholder, had no legal right to challenge it. Starr had sought more than $40 billion of damages for shareholders.

After leaving the attorney general’s office, Spitzer served as New York’s governor for 15 months before resigning in 2008, after being linked to a high-end prostitution ring.

The case is Greenberg v Spitzer, New York State Supreme Court, Appellate Division, 2nd Department, No. 2014-07682. (Reporting by Jonathan Stempel in New York; Additional reporting by Nate Raymond in Boston; Editing by Steve Orlofsky)