Editors’ Note: This article has been updated to reflect a Correction.
ALBANY – As the long-delayed American International Group fraud case inches toward trial, a peculiar sideshow over former Attorney General Eliot Spitzer’s feelings toward former AIG boss Maurice “Hank” Greenberg has taken center stage. Apparently, the issue is whether Spitzer initiated the case against AIG in 2005 out of spite and hatred.
The defense team is aggressively pursuing Spitzer’s private emails for evidence of animus and in recent days has steered the media toward a newly submitted affidavit in which former Attorney General Dennis Vacco, who lost a bitter reelection bid to Spitzer in 1998, says he witnessed an expletive-laden tirade in which his successor, prior to filing the American International Group suit, ranted about Greenberg.
Vacco’s affidavit has made the media rounds, starting with the New York Post on July 10, and Vacco himself has appeared on the national news to recount an incident he says occurred in 2004.
In the affidavit, Vacco said he was meeting with Spitzer on Sept. 28, 2004, when Spitzer launched into a venomous harangue against Greenberg and his son.
“Mr. Spitzer gratuitously made several derogatory, deeply personal and highly inappropriate expletive-laden comments about Maurice R. Greenberg and his son Jeffrey W. Greenberg,” Vacco said in the June 28 affidavit. “It was evident to me that Mr. Spitzer was motivated by some unexplained personal animus.”
Vacco said in the affidavit that he was “very uncomfortable with the conversation and viewed it as unprofessional but did not say anything because Mr. Spitzer was very emotional about the topic and I did not want to compromise my client’s position.”
Vacco, who now practices with the Buffalo law firm of Lippes Mathias Wexler Friedman and has no involvement in the AIG matter, said in a July 11 interview that he brought his recollection of Spitzer’s alleged outburst to Greenberg’s attorney, David Boies of Boies Schiller & Flexner, after seeing press reports on the email battle.
“It was really coincidental around the press associated with Boies’ attempt to disgorge these emails,” Vacco said. “This conversation took place almost eight years ago. I had no reason to think about it or offer it up [previously], but when I saw the reporting around the shadowy emails, I reached into the Greenberg camp.”
Spitzer and his two successors, Andrew Cuomo and Eric Schneiderman, continued the case, alleging that AIG, Greenberg and Howard Smith, AIG’s former CFO, hid the company’s losses through reinsurance transactions to deceive investors and regulators. The action hinges on the state’s Martin Act, which enables the state to prevail on a securities fraud claim without having to establish intent to defraud.
Most of the initial charges have been dismissed, but in May the Appellate Division, First Department, upheld the Martin Act claims, clearing the way for trial before Manhattan Supreme Court Justice Charles Ramos on the remaining counts (NYLJ, May 9). It is unclear when the trial will begin in People v. Greenberg, 401720-2005, since the defendants have a leave application pending with the Court of Appeals.
The Vacco affidavit was submitted in connection with a related Freedom of Information Law action pending in Albany, where Supreme Court Justice Christopher Cahill has held that any emails Spitzer sent from a private account dealing with public business, including the AIG matter, are subject to FOIL.
Cahill said in Matter of the Application of Howard I. Smith v. New York State Office of the Attorney General, 3670-08, that Schneiderman “has both the responsibility and obligation to gain access to the private e-mail account of former Attorney General Spitzer to determine whether documents contained therein should be disclosed” (NYLJ, May 18).
Schneiderman argues that he cannot be compelled to produce documents that are neither in his possession or control and is seeking leave to appeal.
The attorney general’s office and Smith’s legal team at Kaye Scholer have filed a plethora of documents with Cahill in regard to the email tug-of-war that has been going on for nearly five years.
The pertinence of Spitzer’s emails and alleged rage, and whether it resulted from an irrational personal bias or genuine moral outrage over what Spitzer contends Greenberg and his allies did to the insurance market and consumers, is not quite clear from the court filings. It appears though that the defense is suggesting that Spitzer’s decision to pursue the case was clouded by his alleged hostility toward Greenberg.
‘Facts Are Facts’
Spitzer, in a July 11 interview, said he vaguely recalls meeting with Vacco in 2004, and said it is possible that AIG and Greenberg came up in their conversation.
But Spitzer said he doubts that he erupted as emotionally as Vacco contends, and suggests the whole issue of his emails and his alleged loathing of Greenberg is a smoke screen to divert attention from the real issue: whether Greenberg and Smith fraudulently subverted the insurance market.
“While I understand Hank Greenberg’s desire to rewrite history, his effort will fail because facts are facts,” Spitzer said. “Hank Greenberg was removed by his own board as CEO of the company. His company settled for $1.6 billion, the largest settlement at that point in history, to resolve fundamental accounting problems and fraudulent behavior… These facts will be the history Hank Greenberg must deal with.”
Spitzer said he is “disappointed” that Vacco and Boies “continue to challenge the motive underlying my office’s prosecution of AIG and Hank Greenberg.”
“Those efforts are beneath them, and beneath the role of good lawyers,” Spitzer said.
Boies said in a statement that nearly all of the civil charges Spitzer brought have been dismissed, and there were never any criminal charges.
“Although Spitzer went on national television to threaten Mr. Greenberg with criminal charges, neither he nor anyone has ever actually brought criminal charges against Mr. Greenberg,” Boies said. “No court, anywhere, has ever found that Mr. Greenberg did anything wrong.”
Boies said “the terrible damage that was done to AIG, its shareholders and employees as well as the state of New York and the national economy as a result of AIG’s collapse” resulted from risks taken after Greenberg left the company.
“Hank Greenberg is a respected business executive, a decorated war hero, and one of the world’s leading philanthropists,” Boies said in the statement. “He has served his nation, and the state of New York, well all his life. He deserves better.”
Search for Emails
Spitzer said the pursuit of his personal emails is pointless, because there are none that are responsive to the FOIL. He also has expressed outrage that Schneiderman’s office, which says it does not represent the third-party ex-office holder, never told him his personal emails were at issue in litigation (NYLJ, May 22).
Regardless, Schneiderman’s office, which has taken no position on whether the emails the defendants seek even exist, has asked Cahill for permission to appeal to the Appellate Division, Third Department.
In an affidavit, Assistant Attorney General Adrienne Kerwin argues that even if there are emails responsive to the FOIL demand, they are “beyond the reach” of FOIL.
“This court’s order, if not overturned, would require [the attorney general's office] to exercise an authority it does not have, to take possession of and search former Attorney General Spitzer’s personal property in case that property contains materials described by petitioner’s FOIL request,” Kerwin said in an affirmation on June 11.
Kerwin said Cahill’s order “does not explain any lawful technological method [the attorney general] could use to gain access to the private e-mail account of a former employee who is now a private citizen,” adding that her office is “aware of no other judicial decision imposing that obligation on a government agency.”
In response, Smith’s attorneys Vincent Sama, Catherine Schumacher, Daphne Morduchowitz and Joseph Clark of Kaye Scholer said in a memorandum that Schneiderman’s effort to appeal Cahill’s order “is a waste of judicial resources and the latest delay tactic in a very long saga of delay tactics.”
They accuse Schneiderman, and Cuomo before him, of intentionally stonewalling their effort to obtain public records.
“The question at issue here is quite limited: whether government agency officials can avoid FOIL public disclosure obligations by using clandestine, personal email accounts to conduct government agency business,” Kaye Scholer said in a July 6 memorandum of law. “If the [attorney general's] position were adopted, then an agency could simply hand over its documents to a third party to avoid its disclosure obligations under FOIL, or as relevant here, simply use personal email accounts to conduct government business instead of the accounts provided by the State.”
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