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Spitzer Files Lawsuit Against AIG and Executives for Fraud
Source: Office of New York State Attorney General
Published: May 25, 2005
New York Attorney General Eliot Spitzer and the state�s Insurance Department filed a lawsuit today against American International Group, the nation�s largest business insurance company, accusing the firm of manipulating its books to deceive regulators and the investing public.
The lawsuit, filed in State Supreme Court in Manhattan, alleges that AIG former top management, including former Chairman Maurice R. Greenberg and former Chief Financial Officer Howard I. Smith, engaged in numerous fraudulent business transactions that exaggerated the strength of the company�s core underwriting business to prop up its stock price.
"The irony of this case is that AIG was a well-run and profitable company that didn�t need to cheat," Spitzer said. "And yet, the former top management routinely and persistently resorted to deception and fraud in an apparent effort to improve the company�s financial results."
The lawsuit attributes the misconduct at AIG directly to Greenberg. The suit cites e-mails and other evidence showing that Greenberg was personally involved in negotiating some of the fraudulent transactions, and that he directed other AIG staffers to develop and implement the schemes underlying other misleading transactions.
The suit also cites a separate scheme in which AIG improperly booked worker�s compensation premiums as general liability and other coverage. This misconduct reduced the company�s taxes and other assessments.
AIG has already admitted that many of the transactions were improper, has terminated certain implicated personnel, and has announced plans to restate its earnings, according to Spitzer�s statement.
The suit alleges violations of New York�s Martin Act, Executive Law and Insurance Law, plus common law fraud. In addition to injunctive relief, the suit seeks damages and disgorgement of profits from the illegal transactions.
The investigation is continuing.
Read Full Story at Office of New York State Attorney General