Ban SoughtThe New York Court of Appeals ruled last year that the attorney general's office can continue the case, which seeks to ban Greenberg and Smith from the securities industry and from serving as officers or directors of a public company. An intermediate appellate panel in February denied a bid to remove Ramos from the suit. Spitzer sued Greenberg and Smith under the Martin Act, a 1921 state law that allows the attorney general to probe a wide range of financial wrongdoing including Ponzi schemes and investment fraud. Eric Schneiderman, the current attorney general, is continuing the litigation. The case stems from two reinsurance transactions that the state alleges were approved by Greenberg and Smith to conceal negative financial results. One was a deal with Berkshire Hathaway Inc.'s General Reinsurance Corp. used to reverse a decline in loss reserves at AIG.
Steps DownGreenberg stepped down as CEO of AIG, which he had led since 1967, in March 2005, the same month the New York-based insurer said the transaction with Gen Re was improper. AIG restated its earnings, lowering them by $3.4 billion, and paid $1.6 billion to settle claims by regulators. Spitzer sued Greenberg and Smith two months later. The fraud cost AIG shareholders $544 million to $597 million, according to a federal judge who presided over a criminal trial in Hartford, Connecticut. Four former Gen Re executives and one from AIG were convicted in 2008 at that trial. In 2011, they won reversal of their convictions. In 2012, prosecutors agreed to drop charges under deferred-prosecution agreements, and the executives admitted "aspects" of the deal were fraudulent. Dawn Schneider, a spokeswoman for Boies, Schiller & Flexner LLP, which is representing Greenberg, declined to comment on the ruling in an e-mail. "We're pleased that Justice Ramos struck the jury demand, and we look forward to proceeding to trial once the motion for summary judgment is decided," a Matt Mittenthal, a spokesman for the attorney general, said in an e-mail. The case is State of New York v. Greenberg, 401720-2005, New York State Supreme Court, New York County (Manhattan).
–With assistance from Christie Smythe in Brooklyn, New York,.
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