The highest court in the State of New York, United States has finally ruled that the former Chief Executive Officer of American International Group (AIG) Maurice Raymond “Hank” Greenberg should stand trial for fraudulent activities he committed during his tenure with the company.
AIG is an American multinational insurance corporation with more than 88 million customers in 130 countries. The company was founded in 1919 by Cornelius Vander Starr. In 1968, Mr Starr picked Greenberg as his successor. Greenberg held the position until 2005, when he was forced to step down by regulators due to his fraudulent activities.
When he stepped down in 2005, the then-Attorney General of New York, Eliot Spitzer accused Greenberg and Howard Smith, a former AIG chief financial officer, of using fraudulent transactions to hide the insurance company’s losses and mislead investors about its financial standing. Through this dubious means, the two were able to deceive investors, making millions of dollars for the company and themselves, Spitzer alleged.
Attorney Spitzer filed civil charges against the two men, but their lawyers have tried since then to get the charges dismissed from the law court.
However, after a lengthy legal battle, the New York Court of Appeals concluded on June 2 that New York state officials can now try to recover millions of dollars in bonuses and interest from Greenberg and his co-defendant Smith.
Before the ruling, Greenberg’s lawyer, David Boies, had tried many times in court to get the charges dismissed, arguing that a $115 million settlement between AIG executives such as Greenberg and a group of shareholders has settled the case, and that there is no need to pursue it again.
NPR reports that the court can bar the two men from the securities industry and prevent them from serving as directors of any publicly traded companies, if they are found guilty of the charges leveled against them.
The New York Attorney General’s office said the decision by the court against the two men is a victory for the people in the state. Current state Attorney General, Eric Schneiderman said in a statement that after 11 years since the charges were filed, there can now be justice for the people who were duped by the powerful in society, adding that his office is prepared to expose the fraudulent activities of the two men to the world.
“Nobody, no matter how rich or powerful is allowed to commit fraud in our state, and we are very pleased the people of New York will finally have a chance to obtain justice at trial. We look forward to demonstrating that Mr Greenberg and his associates orchestrated two major frauds that caused massive losses to A.I.G.’s shareholders,” he said.
A spokesman for Mr Greenberg told NPR in an email statement that his boss is very disappointed in the ruling. He wrote: “Mr Greenberg respectfully disagrees with the court’s decision, which inexplicably fails to address at all the principal argument raised on appeal — that under the court’s own prior ruling in People v Applied Card the relief sought by the attorney general is barred by settlements already entered into by Mr Greenberg with AIG and the SEC. Mr. Greenberg is considering his options in light of this decision, which he believes flies in the face of both the court’s own precedent and federal law.”
Although Mr Greenberg is out of AIG’s day-to-day operations, he still remains a major shareholder of the company. He has also become a big critic of the company from the sidelines. When the company was rescued by the United States federal government during the 2007/2008 financial crisis, Greenberg attacked the terms of the bailout as onerous.
Mr Greenberg is known to be a major donor to the Republican Party, investing his money in the party. In the past, he donated to Mitt Romney’s presidential candidacy. In the recent Republican Party presidential primaries, he donated $10 million to support Jeb Bush’s candidacy. He also donated $5 million to Conservative Solutions PAC, which supported Marco Rubio’s campaign.
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