Government Still Pursuing Greenberg Case 9 Years Later

, New York Law Journal


Maurice Greenberg
Maurice Greenberg arriving at a meeting for AIG's board of directors in 2013. In background is David Boies, lead counsel for Greenberg.

From the perspective of the attorney general's office, the defendants, with their deep pockets, phalanx of high-powered attorneys and formidable public relations machine, have frustrated efforts to get to trial and pursued distracting tangents unrelated to the issue of whether Greenberg and Smith acquiesced in a fraud.

Since 2005, the defendants have filed dozens of motions in the main case, challenged the attorney general at every level of state court, repeatedly accused Ramos of partiality, filed multiple summary judgment motions, appealed virtually every adverse ruling, spent years going after Spitzer's private emails on the theory that they would reveal prosecutorial bias, sued Spitzer for libel and orchestrated the filing of a series of different ethics complaints against Schneiderman, his lead prosecutor, his executive assistant attorney general and two of his spokesmen.

The Greenberg camp has also deployed prominent former public officials to support various causes. For instance, former Attorney General Dennis Vacco, who was defeated by Spitzer in a 1998 re-election bid, submitted an affidavit suggesting his nemesis harbored extreme hostility toward Greenberg.

Further, when the case was pending before the Court of Appeals, 10 former public officials urged the high court to throw it out: former SEC Commissioner Paul Atkins; former U.S. Attorney General Richard Thornburgh; former Governors George Pataki of New York and William Weld of Massachusetts; former New York City Mayor Rudolph Giuliani; former Representative Michael Oxley, R-Ohio; and former state attorneys general Vacco, F. Chris Gorman of Kentucky, and Andrew Miller and Anthony Troy, both of Virginia (NYLJ, Feb. 5, 2013).

And most recently, the Greenberg camp retained former New York Court of Appeals Judge Joseph Bellacosa to weigh in on whether David Ellenhorn, the lead prosecutor, had misled a court by suggesting that Greenberg harbored plans to take another company public. Bellacosa slammed Ellenhorn, accusing him of violating professional ethics during an appearance before Ramos and in an affidavit to the Appellate Division, First Department (NYLJ, Dec. 11, 2013).

Disgorgement of Bonuses

The latest barrier to trial is a motion the defendants submitted to the First Department on Feb. 10, asking the court for permission to reargue the Ramos bias issue or, in the alternative, grant leave to the Court of Appeals. The odds of the First Department rehearing a matter it disposed of in a brief opinion, or clearing the way to the high court, are anybody's guess. But by seeking leave, the defendants buy another month or so while the Appellate Division considers the motion.

Meanwhile, the defendants are vigilantly monitoring an unrelated First Department case that they believe would eliminate the disgorgement issue, People v. Ernst & Young, 451586/10.

Ernst & Young centers on whether the attorney general has standing to seek disgorgement of funds that the state did not pay. Greenberg and Smith raise a similar issue, arguing that the state has no claim to bonuses that were paid by AIG and that if anyone has a claim for disgorgement, it's AIG, which signed off years ago.

Schneiderman's office has suggested that Greenberg and his allies have maneuvered to delay trial and attempted to distract attention from the only real issue in the case—whether the defendants were involved in a fraud.

"Over nine years, three separate attorneys general have worked to bring justice and accountability on behalf of the victims of this fraud," said Damien LaVera, spokesman for Schneiderman. "At every step, Mr. Greenberg and his lawyers have done everything they can to keep this case from going to court."

Boies insisted that delay is "absolutely not" a part of his legal strategy, and contended that the attorney general, by fighting the defendants on various discovery demands, is at least as responsible as the defense for any hold up.

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