NEW YORK (Bloomberg)—New York Attorney General Andrew Cuomo rejected attempts to settle a lawsuit against Maurice R. Greenberg, said a lawyer for the former American International Group Inc. CEO.

New York officials haven't been willing to rekindle settlement talks after an initial proposal fell apart following AIG's 2008 near-collapse, said David Boies, chairman of Boies, Schiller & Flexner L.L.P. Mr. Greenberg, 84, who ran AIG for 38 years until he was forced to retire in 2005, is accused of using sham transactions to hide losses and inflate reserves at the New York-based insurer. He has denied wrongdoing.

“We've proposed to get a respected neutral, a former judge, to get a negotiated resolution,” Mr. Boies said Wednesday in a phone interview. “We've been unable to get the attorney general's office to be willing to do that. When you have a situation where they won't listen to anybody, they'll simply make a demand and sit on that demand, there's no resolution.”

Richard Bamberger, a spokesman for Mr. Cuomo's office, called the information provided by Mr. Boies “inaccurate.”

“We will not comment about this ongoing matter,” Mr. Bamberger said in an e-mail.

Former New York Attorney General Eliot Spitzer sued Mr. Greenberg in 2005, alleging he and former Chief Financial Officer Howard Smith misled regulators and investors. Mr. Spitzer dropped portions of the suit in 2006, and Mr. Greenberg asked a court to dismiss the rest. Mr. Cuomo inherited the case.

Greenberg cases

Mr. Greenberg has settled or won most of his other legal disputes. In August, Mr. Greenberg agreed to pay $15 million to settle U.S. Securities and Exchange Commission allegations that he manipulated AIG's earnings. AIG agreed in November to settle suits and reimburse as much as $150 million of his legal fees.

A potential settlement between Mr. Greenberg and New York was derailed in September 2008 when losses on soured housing market bets forced the firm into a federal rescue that eventually swelled to $182.3 billion. Assistant New York Attorney General David Ellenhorn told New York State Supreme Court Justice Charles Ramos at a hearing that the parties had reached a deal with Messrs. Greenberg and Smith.

“We reached an oral agreement,” Mr. Ellenhorn told Justice Ramos at a November 2008 hearing. “Then AIG went from $20, $30” a share to “$2, $1, and, unfortunately the deal didn't happen.” Mr. Ellenhorn declined to provide details of the proposed settlement, or why AIG's share-price drop scuttled it.

Mr. Boies said Wednesday he and another Greenberg lawyer, Robert Morvillo, intend to ask Justice Ramos at a scheduled April 20 hearing to either dismiss the suit or grant Mr. Greenberg's motion for summary judgment, which is a ruling before trial.

‘Inadmissible’ evidence

He said that much of the evidence which Mr. Cuomo’s office was relying upon in this case was “inadmissible” because it was “hearsay” from other cases, including a 2008 federal trial of former Gen Re Corp. executives.

Mr. Greenberg, who has testified that he had no role in a fraudulent reinsurance transaction, argued in an April 13 court filing that statements he made that are part of the state’s claims against him are either “omissions” or “immaterial.”

Mr. Cuomo’s office has said Mr. Greenberg wasn’t credible in a pretrial interview he gave in March, in which he said he had no role in a fraudulent reinsurance transaction involving AIG and Gen Re, the reinsurer owned by Warren Buffett’s Berkshire Hathaway Inc.

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