NU Online News Service, April 27, 3:19 p.m.EDT

American International Group Inc. could be on the hook for totalclaims of perhaps $800 million or more involving profits on realestate deals involving AIG’s Global Real Estate unit, according toa lawsuit that could come to trial in New York as early as thissummer.

The lawsuit was filed by Kevin Fitzpatrick, former head of theGlobal Real Estate unit.

His lawyer, Sean O’Shea, alleges in the lawsuit thatFitzpatrick’s 2001 employment contract grants him and his partners10 percent of the profits on the sale of all AIG-ownedproperties.

He says the monies owed are not compensation but “carriedinterest” of the type paid to officials of private-equity groupsand hedge funds as incentives to maximize profits forinvestors.

O’Shea says the employment contract clearly states thatFitzpatrick is owed $275 million to $300 million.

But Mark Herr, an AIG spokesman, denies AIG owes the money. Herrsays, “This is two-year-old litigation. We say his claims have nomerit and he’s not entitled to the money he’s alleging he isowed.”

For his part, O’Shea says that it is unclear what the totalvalue is of claims of other Global Real Estate unit employees andoutside investors, but did not deny that the number could totalmore than $800 million.

He says another suit has been filed by Frank Behm, former headof AIG Global Real Estate in Asia, based in Japan.

Behm is no longer with the company, according to officials atAIG Global Real Estate in Manhattan.

The suit is currently scheduled for trial May 10 in federaldistrict court in New York before Judge Richard Berman, but O’Sheasays that a postponement is likely because lingering preliminaryissues remain to be resolved.

Fitzpatrick alleges that beginning in October 2008, the monthafter it received a federal bailout to avert collapse, AIG violatedthe 2001 contract governing real estate profit distributions to himand some colleagues.

Fitzpatrick calls this alleged breach a factor in his March 2009“resignation for good reason.”

But AIG in May 2009 labeled Fitzpatrick's departure atermination, accusing him of stealing “vast quantities” ofconfidential, proprietary information in the form of documents,computer drives and e-mails beginning in October 2008.

Judge Berman dismissed the AIG counterclaim in an opinion filedlast September, and also rejected AIG’s efforts to have theFitzpatrick suit dismissed.

At the time, Berman urged the two parties to settle thecase.

O’Shea says there are no settlement talks underway.

The cases are Fitzpatrick et al v. American InternationalGroup Inc et al, and American International Group Inc etal v. Fitzpatrick, No. 10-00142.