In a shocking end to a nearly 12-year legal battle, insurance industry legend Maurice “Hank” Greenberg on Friday admitted he created two sham transactions in 2000 to prop up AIG’s bottom line.
Greenberg’s admission settles a high-profile fraud suit brought in 2005 by then-Attorney General Eliot Spitzer.
Greenberg, the 91-year old ex-CEO of AIG, admitted on Friday that he had “participated in and approved” the two sham insurance transactions. He will disgorge $9 million in bonuses as part of the settlement.
Co-defendant, Howard Smith, AIG’s former chief financial officer, also settled the case. He will pay back $900,000 in bonuses.
The long-running battle was waged by Andrew Cuomo when he succeeded Spitzer as AG. Eric Schneiderman then carried the legal football — and scored paydirt with Friday’s settlement.
A public trial started in New York State Supreme Court in September, but was halted as the two side tried to hammer out a deal. Lawyers for both Greenberg and Schneiderman has been in mediation for the past month or so.
In addition to the disgorgement, Schneiderman’s office had been seeking to ban Greenberg from running a public insurance company, which would have been little more than a formality. The billionaire magnate runs C.V. Starr & Co., a private insurer.
While Greenberg had given no ground during the trial, he was motivated to settle the charges in order to preserve his legacy and to avoid censure, a source close to the case told The Post.
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