The Chase Sensale Group Logo

AIG Troubles

Appeals Judge Orders Halt in Pre-Trial Proceedings in Greenberg Case:

 

An associate justice of the New York Appellate Division of the state Supreme Court last week ordered a temporary halt to pre-trial proceedings in the case against former American International Group CEO Maurice "Hank" Greenberg until a panel of the court can decide to further postpone the case while it rules on a call by Greenberg to remove the presiding judge.

Reuters reported that Appeals Judge David Friedman granted Greenberg's request to postpone proceedings for several weeks while an appeals court panel takes further action on a call by Greenberg to remove Supreme Court Justice Charles Ramos from the case for bias.

Ramos has refused to step down.

Greenberg's lawyers argue Ramos has at least created the appearance of partiality, prejudging the case in a way that would preclude him from presiding over a fair trial. They also claim he has made decisions based on inadmissible evidence.

Attorney David Boies, who represents Greenberg, said in a statement that his client was pleased the appeals court judge agreed to hold up the proceedings.

"However," Boies said, "we are troubled by the (New York) attorney general's decision to continue pursuing this litigation." Greenberg's lawyers have argued the case should have ended in April, when New York Attorney General Eric Schneiderman dropped a claim for damages in the case.

Schneiderman is now seeking to have Greenberg and his codefendant, former AIG Chief Financial Officer Howard Smith, banned from the securities industry and from participating as officers or directors of public companies.

The lawsuit accuses Greenberg of overseeing a $500 million sham reinsurance agreement with General Re Corp. that inflated the insurance giant's loss reserves in 1999 and 2000.

Greenberg was ousted from AIG in 2005. AIG reached a $1.64 billion settlement over financial irregularities and the reinsurance deal with then New York Attorney General Eliot Spitzer in February 2006.

 

The Reuters story is here.

Back to news >>>