ALBANY – A former Court of Appeals judge has accused the lead prosecutor in the New York attorney general’s long-running case against former American International Group boss Maurice “Hank” Greenberg of intentionally deceiving trial and appellate judges.

Joseph Bellacosa, who sat on the Court of Appeals from 1987 to 2000 and also served as dean of St. John’s University School of Law, submitted a letter to the Joint Commission on Public Ethics (JCOPE) last month asking it to hold assistant attorney general David Ellenhorn accountable for allegedly false statements.

Ellenhorn, according to public records, said in court and in a sworn affirmation that Greenberg had boasted in his recent book of building another company that could be taken public. The issue is potentially important because the attorney general is seeking an injunction that would bar Greenberg or AIG’s ex-CFO Howard Smith from serving as officers or directors of any public company.

But Greenberg, who has for eight years frustrated attempts by three attorneys general to bring him to trial on civil fraud charges, claims he has no plans to take his companies public.

One of Greenberg’s lawyers, David Grandeau of Niskayuna, has asked for a JCOPE investigation, even though the agency does not enforce the Rules of Professional Conduct. Grandeau contends that Ellenhorn attempted to mislead the court and poison the case by falsely asserting that the former business titan is actively constructing a public company.

The attorney general’s office denies Ellenhorn, a senior trial counsel, did anything improper and suggests the ethics complaint is part of a continuing effort by the defense to deflect attention from the defendants and delay the already long-deferred case.

John Milgrim, a spokesman for JCOPE, would neither confirm nor deny that the agency is investigating Ellenhorn.

Bellacosa and Roy Simon Jr., a former legal ethics professor at Hofstra University School of Law who advises lawyers on issues of professional conduct, were retained by the Greenberg team.

Bellacosa said Ellenhorn violated professional ethics during an appearance before Manhattan Supreme Court Justice Charles Ramos (See Profile) and in an affidavit to the Appellate Division, First Department.

Ramos is presiding over the Greenberg/Smith case and recently rejected a defense motion for recusal alleging that he is biased and hostile toward the defendants. The defendants then appealed to the First Department and obtained a stay pending resolution of whether Ramos should step aside (NYLJ, Oct. 11).

According to court records, Ellenhorn told Ramos and the First Department that Greenberg, in his recent book “The AIG Story,” signaled his intention to run another public company. In an affirmation to the First Department opposing a stay in the proceedings, Ellenhorn said Greenberg bragged in his book “that he is now running a very large private insurance company that could be taken public at any time.”

But according to Greenberg, as well as Bellacosa and Simon, the book says nothing of the sort.

Bellacosa said his review of the records leads “me to a confident and founded conclusion that AAG Ellenhorn had to be aware that his sworn and open court assertions were patently false, misleading, and materially critical to the relief he was seeking from the courts.”

Simon said he found no evidence that Greenberg had “publicly boasted” of plans to go public with his current businesses. Greenberg, 88, is now chairman and CEO of C.V. Starr & Company Inc.

“If JCOPE determines that Mr. Ellenhorn made false statements to courts regarding Mr. Greenberg’s intentions to take one or more of his companies public, or has falsely asserted that Mr. Greenberg has already taken steps to take one of his companies public, then in my professional opinion Mr. Ellenhorn has violated both the prohibition in [the Rules of Professional Conduct] making false statements of fact to a tribunal and the prohibition in [the rules] on engaging in conduct involving dishonesty, deceit, or misrepresentation.”

Grandeau, a former head of the now-defunct state lobbying commission, acknowledged in court papers that JCOPE does not enforce the Judiciary Law.

But he argues that “Ellenhorn’s violations of the Judiciary Law—which have both civil and criminal implications—necessarily raise suspicions among the public that he is violating the public trust,” thus implicating the Public Officers Law, which JCOPE does enforce. Violations of the Public Officers Law can result in a $10,000 fine.

Damien LaVera, a spokesman for Attorney General Eric Schneiderman, said the ethics complaint is “just the latest blatant effort to distract from the facts of the case.”

“No one is above the law, no matter how rich or powerful, and that is why three consecutive attorneys general have sought for nearly a decade to hold Hank Greenberg responsible for his role in a massive fraud,” LaVera said. “For just as long, he has tried to evade responsibility through delay and by attacking his prosecutors…Attorney General Schneiderman will not be deterred from seeking justice in this matter.”

AIG and its top executives have been tussling with the state since 2005, when Attorney General Eliot Spitzer launched the case that was later inherited by his two successors, Andrew Cuomo and now Schneiderman.

The civil case alleges that Greenberg, the CEO of what was once the largest insurance company in the world, and Smith approved reinsurance transactions designed to obscure the financial picture of AIG.

After Greenberg was removed as CEO, AIG admitted to structuring sham transactions and paid a record $1.6 billion fine in 2005. The case started by Spitzer alleged that Greenberg and Smith were involved in the deception and sought damages on behalf of investors.

Several of the counts were dismissed over the years and in April Southern District Judge Deborah Batts (See Profile) approved a $115 million settlement in a federal class action arising from parallel allegations (NYLJ, April 29).

In June, the state Court of Appeals held that the state case could proceed, notwithstanding the fact that financial damages are no longer at issue. It found “evidence sufficient for trial that both Greenberg and Smith participated in a fraud” and gave Schneiderman the green light to seek injunctive relief.

The Greenberg camp has frequently gone on the offensive against its adversaries, accusing Ramos of bias, suing Spitzer for defamation (NYLJ, July 17) and now going after Ellenhorn. There have also been several off-shoots to the main litigation, including a pending matter in which Smith is seeking access to Spitzer’s private emails (NYLJ, Oct. 18).

Greenberg is represented in the main case by Boies, Schiller & Flexner and Skadden, Arps, Slate, Meagher & Flom. Kaye Scholer represents Smith.