N.Y. Won't Hit Greenberg With Criminal Charges

Speculation concerning that possibility had been ongoing since May when New York Attorney General Eliot Spitzer filed a civil suit against AIG, charging that Mr. Greenberg and former AIG Chief Financial Officer Howard I. Smith engaged in a variety of fraudulent business transactions to bolster the company's stock price.

At that time, Mr. Spitzer issued a statement saying that AIG management had "routinely and persistently resorted to deception and fraud…" But Mr. Spitzer's communications director, Darren Dopp, said last week that the issue of criminal charges "just got confused" by the media.

In April, when Mr. Greenberg was called in by state and federal investigators to answer questions, he invoked his Fifth Amendment right against self-incrimination and declined to answer. His lawyers said he did so because his company had denied him information he needed to respond.

Mr. Greenberg has said through his attorneys that he denies he personally engaged in any fraudulent transactions.

According to Mr. Dopp, Mr. Spitzer said in April he thought the AIG matter would be resolved in civil court. Mr. Spitzer's office, he added, is now nearly ready to do just that "with regard to the company." He said attorneys on the civil action against AIG are making progress resolving the suit and "anticipate something happening before the end of the year."

In March, Mr. Greenberg quit as CEO and chairman. According to his attorneys, he was forced to resign without proper deliberation by the full AIG board. Mr. Smith was dismissed by the company.

Mr. Dopp said the questionable AIG accounting transactions involving finite reinsurance deals are being looked at criminally by federal authorities, notably the U.S. Attorney's Office in Manhattan and the Department of Justice in Washington. As to what agency might be considering criminal charges, he said, "Talk to AIG. They know it wasn't Spitzer." An AIG representative said the company had no comment.

In May, AIG restated its financial results for the past five years, cutting earnings by 10 percent and reducing the company's book value by 3 percent. The company admitted then that certain transactions had been improperly booked. Last month, another adjustment improved AIG's balance sheet, increasing retained earnings $490 million.

Infographic, with mugs of Spitzer and Greenberg, and copy below mugs:

Head: Once Upon A Time…

Since the beginning, former AIG CEO Maurice Greenberg, via his attorneys, has denied he personally engaged in any fraudulent transactions.

At one time, N.Y. AG Eliot Spitzer said AIG management "routinely and persistently resorted to deception and fraud…"

Now Mr. Spitzer's spokesman says the issue of criminal charges "just got confused" by the media.