Grand Jury Weighing AIG Case

A New York grand jury is considering criminal charges in a probe of insurer American International Group Inc., which has said improper accounting inflated its net worth, according to people familiar with the matter.

New York Atty. Gen. Eliot Spitzer is presenting evidence to the jury, which will consider whether to issue indictments, said the sources, who declined to be identified.

Joseph Umansky, an AIG senior vice president, testified in exchange for immunity from charges that might stem from the proceedings, the sources said.

Spitzer and the Securities and Exchange Commission subpoenaed AIG in February, and Chief Executive Maurice “Hank” Greenberg was ousted the next month. The grand jury moves Spitzer’s probe into a criminal phase, increasing the pressure on potential defendants to testify against current and former colleagues.

Spitzer said April 11 that he didn’t plan to bring a criminal case against AIG because its board was cooperating with his investigation. A day earlier, he had told ABC News that his office might pursue criminal or civil charges against Greenberg, who ran AIG, the world’s largest insurer, for almost four decades and turned 80 this month.

Fallout from the investigations has erased more than $50 billion of AIG’s market value since the insurer disclosed the subpoenas from Spitzer and the SEC on Feb. 14. Shares of New York-based AIG rose 76 cents, or 1.4%, to $53.76 on the New York Stock Exchange, valuing the company at about $140 billion.

The people familiar with the case said they weren’t sure which individuals Spitzer might be targeting in the grand jury proceedings, which by law are closed to the public.

Spitzer declined to comment when questioned after a speech in Washington on Wednesday.