Bloomberg News

Ex-AIG Chairman Loses Bid to Remove Judge in New York Case (1)

February 04, 2014

Maurice “Hank” Greenberg, the former chairman of American International Group Inc., lost his bid to have a New York appeals court remove a judge from a lawsuit brought in 2005 by the state attorney general’s office.

In the case, which Eric Schneiderman took over when he became attorney general in 2011, the state claims Greenberg and former AIG (AIG:US) Chief Financial Officer Howard Smith bear responsibility for a transaction with General Reinsurance Corp. in 2000 and 2001 that inflated AIG’s loss reserves by $500 million.

State Supreme Court Justice Charles Ramos in October turned down Greenberg’s request to withdraw from the case for bias. An appeals court in Manhattan affirmed that decision today, saying Ramos’s comments don’t suggest he improperly reviewed the recusal motion or improperly exercised his discretion.

“While the judge at times may have been irritated with defense counsel and the prolonged litigation, it cannot be said that his comments, alone or in the aggregate, caused his impartiality to be reasonably questioned,” Justice Peter Tom wrote for the five-judge appellate panel.

The New York Court of Appeals, the state’s highest court, ruled in June that the attorney general can pursue the case against Greenberg and seek to ban him from the securities industry and from serving as an officer or director of a public company.

$115 Million

Greenberg, 88, has argued that the lawsuit was fatally flawed after a court approved the $115 million settlement of a class action that resolved claims against him and Smith. After the accord was approved, the state said it was withdrawing its claim for damages in the case.

“While we disagree with the court’s decision, we continue to believe that the attorney general’s pursuit of this action is waste of judicial and state resources and that the case should be dismissed,” David Boies of Boies Schiller & Flexner LLP, an attorney for Greenberg, said in a statement.

In its decision, the appeals panel said the defense didn’t push for recusal until Ramos ruled against them on a motion to dismiss the lawsuit, years after it was filed.

“Today’s appellate court decision clears the way for us to make our case against Mr. Greenberg in court,” Damien LaVera, a spokesman for Schneiderman, said in a statement.

The case is State of New York v. Greenberg, 401720-2005, New York State Supreme Court, New York County (Manhattan).

To contact the reporter on this story: Chris Dolmetsch in New York State Supreme Court in Manhattan at

To contact the editor responsible for this story: Michael Hytha at

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    (American International Group Inc)
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