Prosecutors win delay in Spitzer's Greenberg fraud case
(Bloomberg) New York Attorney General Eliot Spitzer?s civil accounting fraud case against former American International Group Inc. Chairman Maurice (Hank) Greenberg will be delayed after a judge agreed that questioning some witnesses would compromise a related federal criminal case.
New York State Supreme Court Judge Charles Ramos today granted a request by federal prosecutors to postpone the depositions of 13 witnesses for 60 days.
Assistant US Attorney Sarah Light argued that the evidence-sharing would hamper the criminal prosecution of four other former insurance executives involved in a reinsurance transaction central to both cases.
?To the extent that witnesses are deposed in a civil case, inconsistencies can be used to undermine the credibility of witnesses in the criminal proceeding,? Light told the judge.
In a concession to Greenberg?s attorneys, Ramos also ordered Spitzer?s office not to question Greenberg or former AIG Chief Financial Officer Howard Smith about the reinsurance deal during the 60-day period. Ramos made his ruling over the objections of Spitzer?s deputy, James Henly.
?I think everybody wants to accommodate the US attorney?s officer here, including me,? Ramos said. ?I?m just asking for a little cooperation from the attorney general?s office.?
Federal prosecutors have brought criminal charges against another former AIG official and three former executives of Berkshire Hathaway Inc.?s General Re reinsurance unit accused of using a sham reinsurance deal in 2000 to inflate AIG?s reserves for claims. The transaction is also part of Spitzer?s suit.
?We want this case dismissed quickly and we can?t get there until discovery is completed,? Nicholas Gravante, an attorney for Greenberg and Smith, said afterward.
Greenberg, 80, was removed as chairman and chief executive officer in March 2005 after 38 years at the helm of AIG, the world?s largest insurer.
The defendants in the criminal case are Christian Milton, AIG?s former head of reinsurance; Ronald Ferguson, General Re?s former chief executive officer; Elizabeth Monrad, who had been General Re?s CFO, and Robert Graham, the reinsurer?s former assistant general counsel.
In February, all four pleaded not guilty to conspiring to distort AIG?s finances.
Last week the defendants won a motion to move their case to Connecticut from Virginia, where a trial had been set to begin on May 22. Federal prosecutors hadn?t yet decided whether to appeal the change of venue, Light said.
Such an appeal might take as long as nine months, Ramos said.
Postponing the New York suit may make it more likely that Spitzer, a Democratic candidate for governor, will have left office by the time the case goes to trial. The election is to be decided November 7; Spitzer leaves office December 31.
