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NEW YORK—Former American International Group Inc. leader Maurice R. Greenberg could go on trial in May over his role in a sham reinsurance deal that prosecutors said was designed to hide AIG’s losses and inflate the insurer’s reserves.
At a hearing Wednesday, Justice Charles E. Ramos set a trial date of May 2 for the case, pending resolution of any scheduling conflicts, said Robert Morvillo, an attorney for Mr. Greenberg with Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer P.C. Mr. Morvillo said he plans to ask a state appellate court to delay the trial until appeals in the case are resolved.
The trial grew out of then-New York Attorney General Eliot Spitzer’s investigation of the insurer’s accounting practices, which resulted in a civil suit against Mr. Greenberg, AIG’s former chairman and CEO, and former Chief Financial Officer Howard I. Smith.
While many allegations were dropped after AIG’s 2006 agreement to pay $1.6 billion in damages and penalties, a charge remains that the two former executives were involved in arranging a bogus 2001 loss portfolio transaction with General Re Corp.
In early 2008, federal prosecutors obtained five criminal convictions against four former Gen Re executives—including former Gen Re CEO Ronald Ferguson—and former AIG Vp of Reinsurance Christian Milton in connection with the 2001 finite deal. The prosecution alleged that the sham transaction increased AIG’s reserves by about $500 million without any actual transfer of risk. The convictions are on appeal.
Last October, Justice Ramos issued a summary judgment that Messrs. Greenberg and Smith were liable for the alleged improper use of an offshore vehicle, Barbados-based Capco Reinsurance, as a shell corporation to take on auto warranty losses that AIG had generated in the mid-1990s to remove them from the insurer’s books.
At the time, Justice Ramos refused summary judgment on allegations related to the Gen Re transaction, saying that while the facts “strongly suggest knowledgeable conduct on the part of Greenberg,” the evidence against him was “too remote” to charge him at the time when confronted with his denials, paving the way for the trial.
Those rulings are under appeal.
NEW YORK—Former American International Group Inc. Chairman and CEO Maurice R. Greenberg plans to appeal a New York justice's decision holding him liable for damages arising from one of two allegedly fraudulent reinsurance transactions, Mr. Greenberg's attorney said Friday.