Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  Equities  >  Nyse  >  Berkshire Hathaway    BRK.A

SummaryQuotesChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsSector newsTweets 

Fraud case versus AIG ex-CEO Greenberg cleared for trial

share with twitter share with LinkedIn share with facebook
share via e-mail
0
05/08/2012 | 09:59pm CEST

A New York appeals court on Tuesday gave former American International Group Inc (>> American International Group, Inc.) Chief Executive Maurice "Hank" Greenberg a partial victory in the state's fraud lawsuit against him over two suspect reinsurance transactions, but cleared the way for the case to go to trial.

A New York appeals court on Tuesday gave former American International Group Inc (>> American International Group, Inc.) Chief Executive Maurice "Hank" Greenberg a partial victory in the state's fraud lawsuit against him over two suspect reinsurance transactions, but cleared the way for the case to go to trial.

The appeals panel said a lower court judge was premature to hold Greenberg and former AIG Chief Financial Officer Howard Smith liable in October 2010 for damages over an auto warranty insurance transaction with Capco Reinsurance Co, which the state called a sham that helped AIG hide more $200 million of losses.

However, the panel said New York State Supreme Court Justice Charles Ramos also correctly rejected the defendants' bid to dismiss claims over a better-known transaction with reinsurer General Re Corp. The state said this transaction helped AIG inflate loss reserves by $500 million without transferring risk.

General Re is a unit of Warren Buffett's Berkshire Hathaway Inc (>> Berkshire Hathaway Inc.) <BRKb.N>. Buffett was not accused of wrongdoing.

The unsigned 4-1 decision is the latest twist in a case dating from 2005, when then-New York Attorney General Eliot Spitzer accused Greenberg and Smith of helping to engineer the transactions to hide losses at AIG, which had been the largest U.S. insurer by market value.

These transactions led AIG to restate its 2001 to 2004 financial statements. Spitzer's successors Andrew Cuomo and Eric Schneiderman have also pursued the civil case, which invokes the Martin Act, a powerful state law to combat securities fraud.

Greenberg and Smith plan to ask the state's highest court, the Court of Appeals, to dismiss the entire case, according to a joint statement from Greenberg's lawyers David Boies and John Gardiner and Smith's lawyer Vincent Sama.

The attorney general "failed to develop and present any proper, admissible evidence to support its allegations against Mr. Greenberg and Mr. Smith," Boies and Gardiner said.

James Freedland, a spokesman for Schneiderman, said: "We are pleased that the court has paved the way for a trial to hold the defendants accountable for perpetrating a major reinsurance scheme to defraud investors."

The appeals panel said there are "triable issues of fact as to whether defendants knew of, or participated in the fraudulent aspects of the Gen Re and Capco schemes, given the nature and degree of their personal involvement in both of the challenged transactions, as well as defendants' responsibilities within the corporation."

It also said a definitive ruling on Capco was premature in light of the defendants' sworn denials that they had committed fraud, and their testimony that an AIG senior vice president had assured them that the transaction was proper.

Justice James Catterson dissented. He said that federal law preempted the state's case, and that even if it did not the General Re claims should be thrown out.

Greenberg left AIG in March 2005 after nearly four decades at the helm. AIG in 2006 paid $1.64 billion to settle federal and state probes into its business practices, and in July 2010 agreed to pay $725 million to settle a shareholder lawsuit accusing it of accounting fraud and stock price manipulation.

AIG's transaction with General Re led to five convictions and two guilty pleas of former officials of those companies. A federal appeals court threw out those convictions last August, and a new trial has been scheduled for January 2013.

The U.S. government still owns 61 percent of AIG following $182.3 billion of taxpayer-funded bailouts in 2008 and 2009.

Greenberg's company Starr International Co, once AIG's largest shareholder, is suing the government for $25 billion, calling the bailouts unconstitutional.

The case is New York v. Greenberg et al, New York State Supreme Court, Appellate Division, 1st Department, No. 5297.

(Reporting By Jonathan Stempel in New York; Editing by Phil Berlowitz)

By Jonathan Stempel

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on BERKSHIRE HATHAWAY
06/26 STORE CAPITAL : Buffett's company buys 10 pct of real estate investment firm
06/26DJBERKSHIRE HATHAWAY : Buys 9.8% Stake in Store Capital -- Update
06/26 STORE CAPITAL : Berkshire Invests in Real-Estate Firm Store Capital
06/26DJBERKSHIRE HATHAWAY : Buys 9.8% Stake in Store Capital
06/26DJBerkshire Hathaway Buys 9.8% Stake in Store Capital -- 2nd Update
06/23 BERKSHIRE HATHAWAY : Announces Agreement to Invest in Home Capital
06/23DJBERKSHIRE HATHAWAY : Buffett Sings the Praises of Israel Bonds -- WSJ
06/23DJBERKSHIRE HATHAWAY : Rescues Mortgage Lender -- WSJ
06/23 WARREN BUFFETT : 'Bailout' Buffett burnishes 'lender of last resort' image
06/23 American Airlines pushes back on Qatar Airways plan to buy stake
More news
Sector news : Property & Casualty Insurance - NEC
06/25DJSuncorp Lifts Bid for New Zealand Insurer Tower
06/23DJALLSTATE : Insurance Is a Fun Career! Just Consider the Zombies and Bacon
06/20DJQBE INSURANCE : Seeing Higher Claims in Emerging Markets
06/19DJSAMPO OYJ : Valuation Of Mandatum Life's Portfolio To Be Sold To Danske Bank Fin..
06/15 Personal injury rate change to cost British motor insurers 3.5 billion pounds..
More sector news : Property & Casualty Insurance - NEC
News from SeekingAlpha
06/26 APPLE : Buy Dollars For Less Than 70 Cents
06/26 It's 1999 All Over Again
06/26 Buffett Is An Intelligent REIT Investor
06/26 PREMARKET GAINERS AS OF 9 : 05 am
06/26 Berkshire buys stake in Store Capital; STOR +1.3% premarket
Advertisement
Financials ($)
Sales 2017 239 709 M
EBIT 2017 19 084 M
Net income 2017 18 070 M
Debt 2017 -
Yield 2017 -
P/E ratio 2017 22,92
P/E ratio 2018 21,03
Capi. / Sales 2017 1,72x
Capi. / Sales 2018 1,72x
Capitalization 413 255 M
More Financials
Chart BERKSHIRE HATHAWAY
Duration : Period :
Berkshire Hathaway Technical Analysis Chart | BRK.A | US0846701086 | 4-Traders
Full-screen chart
Technical analysis trends BERKSHIRE HATHAWAY
Short TermMid-TermLong Term
TrendsBullishNeutralBullish
Technical analysis
Income Statement Evolution
More Financials
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 4
Average target price 279 375 $
Spread / Average Target 11%
Consensus details
EPS Revisions
More Estimates Revisions
Managers
NameTitle
Warren Edward Buffett Chairman & Chief Executive Officer
Marc D. Hamburg Chief Financial Officer & Senior Vice President
Charles Thomas Munger Vice Chairman
David Sanford Gottesman Independent Director
Walter Scott Independent Director
More about the company
Sector and Competitors
1st jan.Capitalization (M$)
BERKSHIRE HATHAWAY3.15%413 255
THE TRAVELERS COMPANIE..4.28%35 670
THE ALLSTATE CORPORATI..18.83%32 107
TOKIO MARINE HOLDINGS ..-2.69%31 806
SAMPO OYJ7.11%28 508
MS&AD INSURANCE GROUP ..3.94%21 532
More Results