The PEOPLE of the State of New York, by Andrew M. CUOMO, Attorney General of the State of New York, Respondent,
Maurice R. GREENBERG et al., Appellants.
[971 N.Y.S.2d 748] Boies, Schiller & Flexner LLP, Armonk (David Boies of counsel), and Boies, Schiller & Flexner LLP, New York City (Nicholas A. Gravante, Jr. and Robert J. Dwyer of counsel), Skadden, Arps, Slate, Meagher & Flom LLP (John L. Gardiner of counsel), Charles Fried, of the Massachusetts bar, admitted pro hac vice, of counsel, Kaye Scholer LLP (Vincent A. Sama and Catherine B. Schumacher of counsel) and Andrew M. Lawler, P.C. (Andrew M. Lawler of counsel), for appellants.
Eric T. Schneiderman, Attorney General, New York City (Barbara D. Underwood, Richard Dearing, Won S. Shin and David Ellenhorn of counsel), for respondent.
James J. Park, Brooklyn, amicus curiae.
Kate Stith, of the Connecticut bar, admitted pro hac vice, amicus curiae.
Susan Ann Silverstein, Washington, D.C. (Michael Schuster of counsel), for AARP amicus curiae.
Mayer Brown LLP, Washington, D.C. (Andrew J. Pincus, Paul W. Hughes and Michael B. Kimberly of counsel), Robin S. Conrad, Kathryn Comerford Todd, Maria Ghazal and Kevin Carroll, for Chamber of Commerce of the United States of America and others, amici curiae.
Joseph Brady, General Counsel, North American Securities Administrators Association, Inc., Washington, D.C. (Rick A. Fleming, A. Valerie Mirko and Joseph J. Opron, III, of counsel), for North American Securities Administrators Association, Inc., amicus curiae.
O'Melveny & Myers LLP, Washington, D.C. (Walter Dellinger and Deanna Rice of counsel), and O'Melveny & Myers LLP, New York City (Andrew J. Frackman and Anton Metlitsky of counsel), for former state and federal governmental officials, amicus curiae.
[971 N.Y.S.2d 749] George Jepsen, Attorney General, Hartford, Connecticut (Dinah J. Bee of counsel), and William H. Sorrell, Attorney General, Montpelier, Vermont, for the State of Connecticut and another, amici curiae.
We hold that the Attorney General's claims against two former officers of American International Group, Inc. (AIG) have sufficient support in the record to withstand summary judgment.
The Attorney General began this civil suit against AIG, Maurice Greenberg and Howard Smith in 2005. Until shortly before the suit was brought, Greenberg was the chief executive officer, and Smith the chief financial officer, of AIG. AIG has settled the case; Greenberg and Smith remain as defendants.
The Attorney General alleges that Greenberg and Smith violated section 63(12) of the Executive Law and article 23-A of the General Business Law (the Martin Act), and committed common-law fraud. The statutes on which the Attorney General relies are broadly worded anti-fraud provisions, prohibiting among other things " repeated fraudulent or illegal acts" (Executive Law § 63  ), " persistent fraud or illegality" ( id. ), and " fraud, deception, concealment, suppression [or] false pretense" (General Business Law § 352-c [a] ). It is not disputed that the Attorney General is empowered to sue for violation of these statutes.
The gist of the Attorney General's claim, to the extent that it is now before us, is that Greenberg and Smith participated in causing AIG to enter into a sham transaction with General Reinsurance Corporation (GenRe) in which AIG purported to reinsure GenRe on certain insurance contracts. The Attorney General asserts that the transaction transferred no real risk from GenRe to AIG, and therefore should not have been treated as an insurance transaction on AIG's books; and that the transaction's sole purpose was to increase the insurance reserves shown on AIG's financial statements, thereby creating the impression of a healthy insurance business and bolstering AIG's stock price. The transaction has been the subject of ...