AIG Ex-Chief May Seek to Settle Fraud Lawsuit
Maurice “Hank” Greenberg, the ousted chief executive of American International Group Inc., may be willing to negotiate with New York Atty. Gen. Eliot Spitzer to settle a fraud lawsuit, one of Greenberg’s lawyers said.
“If a reasonable resolution could be reached without litigation, that’s obviously in everybody’s interest,” attorney David Boies said in an interview Friday. “I think there will be some serious settlement discussions.”
The comments suggest that Greenberg, 80, is more receptive to a settlement than his lawyers first indicated when Spitzer filed his suit on May 26. In a statement that day, they said they would “vigorously defend” the case and “respond in due course, denying any fraudulent conduct.”
The civil suit accuses Greenberg, who ran New York-based AIG for almost 40 years, of misleading regulators and investors by using sham reinsurance contracts and other improper accounting to understate liabilities and inflate underwriting income at the world’s largest insurer.
Greenberg still disputes the allegations, Boies said, pointing out that many settlements are reached without the defendants admitting wrongdoing.
He also said it was unlikely that Spitzer would criminally indict Greenberg because his suit covered “civil issues, not criminal issues.” But he added that “you never want to predict what regulators or prosecutors will do.”
Spitzer spokesman Darren Dopp wasn’t available to comment.
Boies didn’t rule out a comprehensive settlement that also resolved investigations by the Securities and Exchange Commission and the Department of Justice, though he said that “even a partial settlement may be something that makes sense.”
He said it was too early to say what constituted a “reasonable” settlement, and he didn’t know when settlement talks might begin.
AIG, which also was named in the suit, has restated five years of earnings, lowering net income by $3.9 billion, or 10%.
AIG shares are down 20% since the company said Feb 14 that it had received subpoenas. The company has said it wants to settle the Spitzer suit.
