Ex-American International Group (AIG) CEO Maurice "Hank" Greenberg may pursue defamation claims against his longtime foil, former New York Gov. Eliot Spitzer, who said that Greenberg was guilty of fraudulent accounting practices, a state appeals court ruled.
Writing for a four-judge panel of the Appellate Division, Second Department, Justice Cheryl Chambers said that a Putnam County judge properly found Spitzer's public statements about Greenberg were made with actual malice to "discredit Greenberg and damage his reputation and career" while bolstering his own.
Chambers was joined on the decision by Justices Mark Dillon, Leonard Austin and Robert Miller. Oral arguments in the case were held in March 2016.
In 2005, while he was New York attorney general, Spitzer's office launched an investigation into AIG's accounting practices and Greenberg subsequently resigned from the company.
Spitzer's office also filed suit against Greenberg that year under the Martin Act, one of New York's "Blue Sky Laws," which gives the New York attorney general extraordinary authority to investigate and prosecute fraud. He accused Greenberg of taking part in a fraudulent reinsurance deal to boost AIG's revenues, as well as brokering a deal with an offshore company to make losses from its failing auto warranty insurance business look like capital losses.
Statements at issue
Spitzer made the statements at issue in the defamation case in 2012 on CNBC's "Closing Bell," four years after his single term as New York's governor was cut short by a prostitution scandal. He also made the statements on the now-defunct Current TV network, as well as in his 2013 book "Protecting Capitalism."
In one example from his CNBC interview, Spitzer said that, under Greenberg, AIG was being run by a "CEO whose accounting was fraudulent. That's why the board removed him," Chambers said the statement implies that the allegations against Greenberg were established, when in fact they were pending.
Additionally, Chambers said, because Spitzer brought the suit against Greenberg, a listener would be less likely to take his statements as fact rather "than merely expressing an opinion about the strength of the case."
Greenberg is represented by his longtime lawyer David Boies, as well as Boies Schiller Flexner attorneys Nicholas Gravante, Robert Dwyer and Amy Neuhardt.
Proceed to trial
"We are, of course, pleased with the appellate court's decision which will now permit Mr. Greenberg's claims to proceed to trial," Boies said in an emailed statement.
Spitzer was represented by Levine Sullivan Koch & Schulz partner Jay Ward Brown. In a statement, Spitzer said he looks forward to "proving the truthfulness" of the statements he made about Greenberg during his run as AIG's CEO.
He also echoed a statement from a February news release from New York Attorney General Eric Schneiderman's office announcing a $9 million settlement between Greenberg and the government in the civil fraud case, which stated that Greenberg admitted to "initiating, participating in, and approving two fraudulent transactions committed by AIG" while he was CEO.
"A decade of legal obstructionism by Greenberg will not obscure the facts," Spitzer said.
The word "fraud" does not appear in the statement Greenberg submitted for the settlement.
Schneiderman's news release announcing the settlement agreement, trumpeted by both sides as a victory, touched off a brief PR battle between Schneiderman and Greenberg, with Boies firing out a statement on the latter's behalf that the attorney general's statements were "false and misleading" and noting that the government originally sought $5 billion in damages in the case.
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