A NY state appeals court tossed former American International Group Inc (AIG) Chairman ‘s motion to dismiss a lawsuit accusing him of masterminding accounting fraud, Reuters reported.
Greenberg had charged that the New York Attorney General’s office “has become so blinded in the pursuit of a perceived trophy that it is prepared to rely on testimony that it knows to be false in an effort to obtain relief that it knows to be meaningless. This waste of court time — the trial will take at least four months — and of taxpayers’ dollars should have ceased long ago.”
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But the court said New York Attorney General Eric Schneiderman demand that Greenberg, 89, cough up millions of dollars in fraudulent bonuses was “legally viable.”
Greenberg stepped down as AIG’s chief executive officer in March 2005. He had led the company since 1967 and built it into the world’s largest insurer.
Greenberg and former AIG CFO Howard Smith were accused of running forged transactions in 2000 and 2001 that inflated AIG’s loss reserves by $500 million.
A trial had been scheduled to start in February, and now the final delay has been removed as Greenberg has exhausted his efforts to throw the case out.
“We look forward to presenting the people’s case, ” Liz DeBold, a spokeswoman for Schneiderman, said in a statement.
AG Schneiderman, who picked up the lawsuit that had been started by his predecessor and later the disgraced governor, Eliot Spitzer, also seeks to ban the Greenberg and Smith from serving as officers or directors of public companies.
The appeals court ruled that Greenberg and Smith failed in their effort to demonstrate that a permanent injunction under New York’s securities fraud statute, was unwarranted.
