NU Online News Service, Nov. 21, 2:06 p.m.EST

Starr International Co., run by former American InternationalGroup Inc. CEO Maurice “Hank” Greenberg, has filed a lawsuitagainst the United States, claiming the government violated theConstitution when it took majority ownership of AIG withoutcompensating the company’s shareholders.

The suit, filed Nov. 21 in the U.S. Court of Federal Claims,claims the federal government violated the Fifth Amendment when itassumed an 80 percent stake in AIG while making $182.3 billion inbailout funds available to the insurer to avoid its collapse.

Starr seeks $25 billion from the lawsuit for it and a class ofAIG shareholders. The amount is based on the value of thegovernment’s stake in AIG as of Jan. 14, according to Starr.

Jan. 14 is when AIG finalized a recapitalization plan with the federal government. Thegovernment now holds a 77 percent stake in AIG.

AIG, named as a nominal defendant, declined to comment.

“The government is not empowered to trample shareholder andproperty rights even in the midst of a financial emergency,” thelawsuit says.

Starr says the government infringed upon constitutionalprovisions, stating that the federal government cannot deprive anyperson of property without due process of law, and cannotappropriate private property for public use withoutcompensation—which Starr alleges happened when the governmentfunneled billions of dollars to foreign entities, using AIG as avehicle.

Though AIG’s rescue to preserve the country’s financial systemmay have been a “laudable goal,” the “ends could not and did notjustify the unlawful means employed by the government to achievethat goal.”

In 2008 AIG faced liquidity issues related to its exposure todebt from credit default swaps. Starr says the government couldhave ended its AIG involvement with liquidity support it providedto other institutions, but instead it took majority control ofAIG.

After numerous steps it took restructure debt, AIG says it isindependent of government support.

AIG posted a $2.5 billion net loss during 2011's third quarter. Thethird-quarter loss was the company’s worst since 2009.