In their civil suit against former American International Group CEO Maurice Greenberg, the office of the New York Attorney General is dropping a claim for damages. The decision was made to expedite the suit against Greenberg, who is being charged with defrauding investors.
The lawsuit was originally filed in 2005 by then-Attorney General Eliot Spitzer and former AIG chief financial officer Howard Smith, and sought nearly $6 billion in damages. Though the damages are no longer part of the suit, the Attorney General’s office will continue to pursue the civil fraud case. The office said that the damages were dropped “to avoid further delay and expedite the trial of the state action.”
Reuters reports that the lawsuit centers on a couple of reinsurance transactions in 1999 and 2000. Greenberg is accused of committing accounting fraud that led to a $3.9 billion restatement in 2005. Greenberg recently settled a class-action lawsuit filed by AIG investors over the same fraud, in which he and the other defendants paid $115 million. AIG has paid $725 million already as part of lawsuits filed by investors. Attorneys for Greenberg say that by settling the class action lawsuit, they have resolved the claims against their client, and that the Attorney General’s suit is duplicative.
“Attorney General (Eric) Schneiderman feels strongly that individuals in the financial services industry who perpetrate fraud, no matter how wealthy or powerful, must be held publicly accountable, and that is why we believe justice will best be served by proceeding to a long overdue trial of Mr. Greenberg as quickly as possible,” New York attorney general spokesman Damien LaVera said in a statement.
The case is currently pending before the New York Court of appeals, and Schneiderman remains hopeful that, if successful, Greenberg will be banned from working in the securities industry or serving as a director of a company.