The long awaited trial for Hank Greenberg started Tuesday. Greenberg is the former head of the insurance giant AIG. New York’s Attorney General is trying to show that Greenberg oversaw two transactions that duped shareholders of half a billion dollars, but what’s mostly at stake is the reputation of a Wall Street luminary.
At the age of 91, Maurice Hank Greenberg is a legend. Over the last 40 years, he revolutionized the insurance industry and built one of the largest companies in history. And then in the early 2000s, he presided over an accounting scandal. Several of those claims were settled without admission of wrongdoing. But the case against Greenberg is still with us. Prosecutors say they are just enforcing the law. But many on Wall Street see the case as a vendetta against Greenberg.
“It is an epic battle, and they’ve had a lot of battles getting to this point,” says Michael Weinstein, a former federal prosecutor who now specializes in white collar defense. He says Greenberg’s legal team has a lot of work to do.
"The government and the Attorney General can come back with a lot of examples when he was a very ruthless businessman…in the public's eye ruthless, when all the things happened in the financial crisis, can really be a negative.”
Greenberg has spent about $25 million over the last 10 years on his defense team. Oscar Chase is a legal scholar at NYU. He says the reason this case has taken 11 years is because Greenberg’s attorneys appealed a total of nine pre-trial motions. Each appeal meant months of waiting.
“In fact. in this case I calculated that seven-and-half years was spent just waiting,” Chase said.
It’s like doing a video replay on every decision the umpire makes. Twice Greenberg asked a higher court to throw out the case without even a trial.
“That took up a number of months in a couple of cases, those were unnecessary in my view,” said Chase.
Greenberg’s lawyer, David Boies, denies that his client is using his wealth to delay justice.
“Hank Greenberg is 91-years-old. He’s trying to build a new business. He has got no interest in delaying the resolution of this case.”
In fact, Boies says Greenberg repeatedly tried to settle the case. But New York’s Attorney General refused. Boies calls this case a waste of taxpayer money, but state regulators have a lot at stake too. To bring the case against Greenberg, New York used a very old and sweeping law called the Martin Act. State prosecutors like it because it doesn't require them to prove any intent to commit fraud. They just have to prove that fraud happened.
Attorney Michael Weinstein says, “If they are successful against Greenberg and arguing that the Martin Act applies, then they are able to roll it out and use it against similar people in the future.”
So for the government, this case is not just about Greenberg. It’s about policing the future titans of Wall Street.
The trial is expected to last several weeks.
