Ex-AIG Chief Greenberg Can’t Persuade Judge to Leave Case

Former AIG Inc. Chairman Maurice “Hank” Greenberg lost a second bid to have a judge remove himself from an eight-year-old lawsuit brought by the New York attorney general’s office.

Greenberg in July asked Supreme Court Justice Charles Ramos to recuse himself, saying the judge has shown bias. Ramos denied the motion today in Manhattan without hearing arguments.

“I don’t rule based on whether I like someone or I don’t like someone,” said Ramos, who also denied a similar motion in the case in March 2011. Greenberg’s attorneys told the judge they plan to appeal his ruling. Ramos denied a motion for a stay of the case pending the appeal.

The New York Court of Appeals, the state’s highest court, ruled in June that the state can pursue its case against Greenberg over his role in a sham reinsurance transaction and can seek an injunction banning him from the securities industry and from serving as an officer or director of a public company.

Greenberg, 88, argued the suit was fatally flawed after court approval of a $115 million settlement of a class-action case that resolved claims against him and ex-AIG Chief Financial Officer Howard Smith. After the accord was approved, the state said it was withdrawing its claim for damages in the case.

Eric Schneiderman, who took over the case when he became attorney general, says Greenberg and Smith bear responsibility for the transaction with General Reinsurance Corp. in 2000 and 2001 that inflated AIG’s loss reserves by $500 million.

‘Sovereign Interest’

Greenberg in July asked Ramos to dismiss the case before a trial, saying the attorney general’s office has no “valid sovereign interest” in pursuing it. Ramos scheduled oral arguments on that motion for Oct. 17 and said the case is a “long way” from trial.

“This case is eight years old,” Ramos said. “This is an embarrassment for the commercial division.”

“This case should be an embarrassment to the attorney general,” said John L. Gardiner, an attorney representing Greenberg with Skadden Arps Slate Meagher & Flom LLP. “This case should be over.”

The case is State of New York v. Greenberg, 401720-2005, New York State Supreme Court, New York County (Manhattan).

To contact the reporter on this story: Chris Dolmetsch in New York State Supreme Court in Manhattan at cdolmetsch@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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