(Bloomberg) — Maurice "Hank" Greenberg, the former chairman of American International Group Inc., lost a bid to throw out the New York attorney general's 2005 lawsuit over alleged sham transactions intended to inflate the insurer's financial health.
The state claims Greenberg, 89, and former AIG Chief Financial Officer Howard Smith bear responsibility for sham transactions with General Reinsurance Corp. in 2000 and 2001 that inflated AIG's loss reserves by $500 million. Former Attorney General Eliot Spitzer's pursuit of the case forced Greenberg to step down from AIG in 2005 after he spent four decades building the company into the world's largest insurer.
Manhattan Supreme Court Justice Charles Ramos ruled yesterday that the case can proceed to trial.
"This action has been pending for eight years, meandering through a series of seemingly never-ending motions and appeals," Ramos said in his decision. "The determination of the issues remaining in this action must be tried."
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