Opening arguments began on Tuesday in the trial of former American International Group chairman Maurice "Hank" Greenberg over accounting fraud at the insurance giant some 16 years ago.
Greenberg, 91, is facing civil charges from the New York Attorney General's Office of orchestrating a $500 million transaction to inflate the insurer's reserves and a $200 million transaction to hide underwriting losses. Former AIG Chief Financial Officer Howard Smith is also named as a defendant.
The two men "designed, created, negotiated and implemented every major aspect" of the two fraudulent transactions in the case, Assistant Attorney General David Ellenhorn said in his opening statement.
Greenberg, who sat at the defense table in New York state court in Manhattan, is expected to testify during the trial.
David Boies, Greenberg's lawyer, said in his opening that the attorney general's office would not be able to prove any wrongdoing.
"This case is devoid of any admissible evidence that ties Mr. Greenberg to anything improper in either of these transactions," Boies said.
Vincent Sama, who represents Smith, will give his opening on Wednesday.
The case, filed by then-New York Attorney General Eliot Spitzer in 2005 and continued by Attorney General Eric Schneiderman, did not go to trial for more than a decade, due to legal wrangling that twice made its way to the Court of Appeals, the state's highest court.
Greenberg nearly settled the case in 2008 with a $100 million gift to charity, Boies told Reuters on Monday, but the market crashed that September along with the value of Greenberg's AIG stock holdings.
Damages were dropped from the case in 2013 after Greenberg and Smith entered into a $115 million settlement with AIG shareholders, but Schneiderman wants to claw back millions in bonuses, plus interest, paid to the defendants during the period the alleged fraud took place.
Ellenhorn said on Tuesday the state was seeking $46 million from Greenberg and $6 million from Smith, subtracting around $16 million the two paid in a 2009 settlement with the U.S. Securities and Exchange Commission over the improper accounting.
The attorney general also is seeking to bar the executives from serving as officers or directors of public companies.
Justice Charles Ramos of New York state court in Manhattan will decide the non-jury case, which may run into early next year with breaks between trial dates.
"My fear is at the end of this trial I will know more about reinsurance than I ever wanted," the judge quipped.
Leaving court on Tuesday, Greenberg told Reuters the case "never should have gotten to this point," but that it would be good "to set the facts out."
The defendant, who is still the head of C.V. Starr, a private insurance company, said he was about to fly to Argentina for a conference.
Greenberg led AIG for four decades before he was ousted in 2005. The following year, AIG paid $1.64 billion to settle federal and state probes into its business practices.
The case is People v Greenberg et al, New York State Supreme Court, New York County No. 401720-2005.