BROOKLYN (CN) – A New York appeals court refused Wednesday to let former New York Attorney General Eliot Spitzer off the hook on claims he defamed the erstwhile top dog at AIG.
Two years before the insurance giant took a $180 billion bailout to avoid collapsing at the height of the 2008 financial crisis, AIG paid less than one-tenth of that amount to settle civil fraud charges with federal and New York authorities.
Maurice “Hank” Greenberg was forced to step down as CEO of AIG as New York’s investigation came to light but has always maintained his innocence, insisting that Spitzer brought the case to boost his chances of obtaining the governor’s office.
In 2013, five years after Spitzer suffered his own fall from grace at the hands of a prostitution scandal, Greenberg slapped the politico with defamation claims.
Greenberg took issue with statements Spitzer made in TV interviews and in his book, “Protecting Capitalism Case By Case,” saying the former governor falsely implicated him in fraud and mischaracterized his departure from AIG.
Though Greenberg paid $15 million to settle a Securities and Exchange Commission action, the agreement required no admission of wrongdoing.
Greenberg sued Spitzer about 90 miles north of New York City in Putnam County Supreme Court.
Though Judge Lewis Lubell there shot down a motion by Spitzer to dismiss the case in 2014, the Appellate Division’s Second Judicial Department winnowed Greenberg’s claims down on Wednesday.
Refusing to dismiss 92-year-old Greenberg’s complaint entirely, however, the ruling says it “adequately stated that Spitzer acted with actual malice” in criticizing Greenberg.
Specifically, the former executive says Spitzer “did so solely to discredit Greenberg and damage his reputation and career, while attempting to bolster Spitzer's own reputation and career,” Justice Cheryl Chambers wrote for a four-person panel.
Spitzer submitted testimony in support of his motion that quoted Greenberg as admitting to having “lost [his] job.”
Though Chambers found the admission compelling, she said it is not “conclusive and, therefore, does not utterly refute Greenberg's contention that he resigned.”
Justices Mark Dillon, Leonard Austin and Robert Miller rounded out the Brooklyn-based panel.acc
The decision Wednesday came seven months after Greenberg reached an unrelated $9 million settlement with Spitzer’s successor, current New York Attorney General Eric Schneiderman.
The settlement brought to close a 12-year litigation that accused Greenberg and former AIG chief financial officer Howard Smith of manipulating the company’s accounting records in 2000 and 2001 to hide hundreds of millions of dollars in losses from investors.
Spitzer brought the underlying civil accounting fraud charges in 2005 as part of a crackdown on fraud and anti-competitive practices in the insurance industry.
During his 2012 appearance on his own program, “Viewpoint” on Current TV, Spitzer defended his treatment of the former AIG executive. “Every statement I have made about Hank Greenberg’s role in these frauds has been proven true and accurate,” Spitzer said.
That same year, in a July 2012 interview on CNBC television program “The Closing Bell” with program anchor Maria Bartiromo, Spitzer called Greenberg “one in a litany of corporate executives who defrauded the market” and “the one who instigated the conspiracy.”
Spitzer said he’s looking forward to proving the the truthfulness of all the statements he made about Greenberg’s behavior as CEO of AIG. “A decade of legal obstructionism by Greenberg will not obscure the facts,” the former attorney general said in a statement.
Schneiderman’s office backs him up as well, Spitzer said, quoting a statement it gave at the time of the recent settlement: “Greenberg admits to initiating, participating in, and approving two fraudulent transactions committed by AIG while CEO.”
Spitzer is represented by Jay Ward Brown at Levine Sullivan Koch & Schulz LLP in New York City. The firm has not returned a request for comment.
Greenberg is represented by David Boies of Boies Schiller Flexner. “We are, of course, pleased with the appellate court's decision which will now permit Mr. Greenberg's claims to proceed to trial," Boies said of the ruling.
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