Greenberg Isn’t Negotiating $100 Million Deal in Fraud Lawsuit

By Karen Freifeld

Sept. 6 (Bloomberg) — Maurice “Hank” Greenberg, American International Group Inc.‘s former Chief Executive Officer, isn’t negotiating a settlement that includes a $100 million fine to resolve a civil accounting-fraud lawsuit, his spokesman said.

“There is no consideration being given to and no discussions concerning Mr. Greenberg paying $100 million in damages or fines,” Greenberg spokesman Glen Rochkind said yesterday in a statement.

CNBC’s Charles Gasparino said yesterday that Attorney General Andrew Cuomo wanted a fine of $50 million to $100 million, maybe more, and that Greenberg had conceded to paying a fine. CNBC said negotiations stalled over settlement language. The Wall Street Journal reported later that Greenberg may be fined at least $100 million.

Talk of a settlement in the case surfaced in July when Greenberg, 83, was scheduled to provide sworn testimony. Greenberg was to be questioned after a state appeals court rejected his request for a delay. The deposition was postponed the night before it was set to begin July 22.

The deposition was rescheduled for Sept. 2 and adjourned again until Sept. 11, said Dawn Schneider, a spokeswoman for the law firm representing Greenberg, in an e-mail on Sept. 2.

Sham Transactions

The state claims in its complaint that Greenberg and Howard I. Smith, AIG’s former chief financial officer whose deposition also has been postponed, used sham transactions to hide losses and inflate reserves at AIG, the world’s largest insurer by assets. Greenberg ran New York-based AIG for 38 years until he was forced to retire in 2005, two months before then-New York Attorney General Eliot Spitzer sued him.

Greenberg quit AIG 1amid accounting probes by state and federal officials that led to a $3.4 billion restatement of profits for a five-year period beginning in 2000. The company agreed to pay more than $1.6 billion to settle claims by Spitzer and the U.S. Securities and Exchange Commission that it misled investors.

Spitzer dropped portions of the lawsuit against Greenberg in 2006. Cuomo took over the case when he became attorney general in January 2007.

Alex Detrick, a spokesman for Cuomo, declined to comment yesterday.

David Boies of Boies, Schiller & Flexner, the law firm representing Greenberg, declined to comment beyond the spokesman’s statement.

The case is New York v. Maurice Greenberg, 401720/2005, New York Supreme Court, New York County (Manhattan).

To contact the reporter on this story: Karen Freifeld in New York State Supreme Court at kfreifeld@bloomberg.net.

Last Updated: September 6, 2008 00:01 EDT

Advertisements