New York’s fraud case against former American International Group (AIG) CEO Maurice Greenberg has been cleared for trial as of Tuesday. The case began in 2005 when the N.Y. attorney general accused Greenberg and former AIG CFO Howard Smith of hiding the company’s losses through fake transactions.
The N.Y. appeals court gave the defendants at least a little relief in its latest ruling, which said that a lower court was too hasty when it held Greenberg and Smith responsible for damages over one such transaction with Capco Reinsurance Co., a deal that allegedly helped AIG cover up more than $200 million in losses.
However, the appeals court also said the lower court was right not to dismiss claims over a different transaction, this one with reinsurer General Re Corp., which covered up $500 million in losses according to the state.
There are "triable issues of fact as to whether defendants knew of, or participated in the fraudulent aspects of the Gen Re and Capco schemes,” the court wrote, “given the nature and degree of their personal involvement in both of the challenged transactions, as well as defendants' responsibilities within the corporation."
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