(Reuters) - Maurice “Hank” Greenberg, the former American International Group Inc (AIG.N) chief executive, has more than doubled the size of his class-action lawsuit against the United States over the insurer’s bailout to roughly $55.5 billion from $25 billion.
In an amended complaint filed late Monday in the U.S. Court of Federal Claims, Greenberg’s Starr International Co said it is now seeking damages over Maiden Lane III LLC, a vehicle designed to rid banks of toxic debt underlying transactions with AIG.
The claims are in addition to claims that Starr previously asserted over the government’s taking of a 79.9 percent stake in AIG in September 2008, which was eventually swapped for 562.9 million common shares.
In the amended complaint, Starr said it is seeking to recover, on behalf of shareholders and the company, $23 billion over the government’s 79.9 percent stake, plus as much as $32.5 billion of collateral it said was given away through Maiden Lane III.
It is also seeking unspecified damages related to AIG’s 1-for-20 reverse stock split in June 2009.
Starr said the various actions constituted an illegal taking that violated the 5th Amendment of the U.S. Constitution.
AIG in January refused to help Starr pursue the lawsuit, and on Tuesday reaffirmed that refusal.
In an earlier version of the complaint, Starr estimated total damages as being “in no event less than $25 billion.”
This phrase does not appear in the new complaint, which was also filed by Greenberg’s lawyer David Boies of Boies, Schiller & Flexner LLP.
Prior to the bailout, Starr had held a 12 percent AIG stake, making it the largest shareholder of what had been the world’s largest insurer by market value.
A U.S. Department of Justice spokesman was not immediately available for comment. Robert Dwyer, a partner at Boies, Schiller & Flexner, declined to comment.
Starr filed the amended complaint a few hours after U.S. Claims Judge Thomas Wheeler awarded class-action status to two groups of shareholders, which the judge said could number in the tens of thousands, challenging the $182.3 billion AIG bailout.
Maiden Lane III, named for the downtown Manhattan street where AIG is based, was created by the Federal Reserve Bank of New York to repurchase from AIG counterparties more than $62 billion of assets linked to collateralized debt obligations.
Starr said the repurchases, sometimes done at 100 cents on the dollar, was a “backdoor” bailout for Goldman Sachs Group Inc (GS.N), Societe Generale SA (SOGN.PA) and other banks that had entered more than $400 billion of credit default swaps with AIG.
“Without any budgetary, regulatory, or other authority, FRBNY and its agents took or illegally exacted 79.9% equity and voting interest from AIG in September 2008, (and) gave away AIG’s legal rights and $32.5 billion of its collateral through the Maiden Lane III transaction,” the amended complaint said.
Starr is separately appealing the November 2012 dismissal of its related lawsuit against the New York Fed.
U.S. District Judge Paul Engelmayer in Manhattan at the time said he found nothing to suggest that AIG directors were coerced into accepting the bailout, which he called the result of “corporate desperation.
AIG decided on January 9 not to join Greenberg’s lawsuit, citing potential harm to its reputation. Some politicians and voters had recoiled at the prospect that AIG might sue the same government that had rescued it from collapse.
Starr attacked this decision, saying it stemmed from government coercion and justified its lawsuit on AIG’s behalf.
“The United States indicated it would wage a negative public relations campaign against AIG and its directors, terminate any cooperative relationship with AIG, and heavily scrutinize AIG’s SEC, tax, and other filings,” Starr said in the complaint.
Jim Ankner, an AIG spokesman, said the board is standing by the decision and opposes the lawsuit by Greenberg, who had led the insurer for nearly four decades before his 2005 ouster.
“AIG will neither pursue these claims itself nor permit Starr to pursue them in AIG’s name,” he said. “AIG will move to dismiss the derivative claims asserted by Starr in AIG’s name.”
On March 1, AIG eliminated the government’s last financial stake by repurchasing warrants from the Treasury Department.
The case is Starr International Co. v. U.S., U.S. Court of Federal Claims, No. 11-00779.
Reporting by Jonathan Stempel in New York; Editing by Phil Berlowitz