Ex-AIG CEO Greenberg admits to accounting fraud, settles lawsuit
- Author: Zachary Reyes Feb 11, 2017,
Feb 11, 2017, 18:50
Former AIG CEO and chairman Maurice "Hank" Greenberg agreed to a $9.9 million settlement Friday in a NY corporate fraud case, ending a almost 12-year court battle by the prominent insurance industry executive.
Both Greenberg, 92, and Smith settled the charges against them and agreed to pay disgorgement and penalties to the State of NY, totaling $9.0 million and $900,000 respectively.
The settlement puts an end to a legal drama that has played out for more than a decade, with Greenberg aggressively contesting the suit with an array of legal motions and challenges that worked their way to the state's highest court.
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Former AIG executives were named defendants in a case involving engineering a half-billion transaction with Berkshire Hathaway Inc. subsidiary General Re Corp to inflate the company's reserves.
Greenberg led AIG for four decades before he resigns in 2005. The company also admitted to "improper or inappropriate transactions" and accounting irregularities, as well as intending to deceive regulators.
But Greenberg defense attorney David Boies called Schneiderman's characterization of the case, which went to trial in 2016, "false and misleading". "I knew these facts at the time that I initiated, participated in and approved these two transactions", said Greenberg, who agreed to pay $9 million of the settlement.
"As a result of these transactions, AIG's publicly-filed consolidated financial statements inaccurately portrayed the accounting, and thus the financial condition and performance for AIG's loss reserves and underwriting income", Greenberg and Smith said in their statements. At that point, having testified to their role, the former executives admitted to being personally involved in and approving the fraudulent deals.
Greenberg and Smith said in Friday statements that they knew that the transactions were meant to increase AIG's loss reserves and convert underwriting losses into investment losses.