Maurice Greenberg
Maurice Greenberg arriving at a meeting for AIG’s board of directors in 2013. In background is David Boies of Boies, Schiller & Flexner. (AP/Mark Lennihan)

Maurice “Hank” Greenberg’s $25 billion lawsuit against the U.S. government over the bailout of American International Group Inc. moved a step closer to trial last week, as a federal judge denied the government’s motion for summary judgment.

That trial, set to begin Sept. 29, would feature testimony from former top government officials who led the response to the 2008 financial crisis, as well as some of Wall Street’s most prominent banking lawyers.

In a three-page ruling on Aug. 22, U.S. Court of Federal Claims Judge Thomas Wheeler yet again refused to knock out the suit brought by lawyers at Boies, Schiller & Flexner and Skadden, Arps, Slate, Meagher & Flom on behalf of Greenberg’s Starr International Co.

Greenberg, a former AIG chairman, claims that the government’s acquisition of an 80 percent stake in AIG during the financial crisis amounted to an illegal taking.

Starr has claimed the government used that controlling stake to covertly funnel billions of dollars to other preferred financial institutions. In particular, Starr said the government caused AIG to make full payments to credit default swap counterparties without negotiating discounts—a move Starr claims cost AIG more than $60 billion.

The government’s lawyers countered that AIG and its directors voluntarily agreed to the government’s terms. They also claimed that there’s no evidence that AIG shareholders lost money.

Wheeler, however, held that a trial is necessary because there’s still a dispute about the underlying facts, and expert testimony is needed to help settle complex financial and economic issues.

A spokeswoman for Boies Schiller said the decision speaks for itself and declined further comment. A spokeswoman for the U.S. Department of Justice’s Civil Division, which is representing the government, declined to comment.

Greenberg struck out in a similar lawsuit, claiming that the Federal Reserve Bank of New York breached its fiduciary duties to AIG shareholders under Delaware law during the bailout. In that case Southern District Judge Paul Engelmayer (See Profile) found in 2012 that because of the uniquely federal interests at stake in stabilizing the national economy, state fiduciary law did not apply to the Federal Reserve Bank of New York’s rescue activities.

Greenberg has had better luck at the Court of Federal Claims. Wheeler allowed the illegal takings claim to survive a government motion to dismiss in June 2013. The judge also permitted Greenberg’s lawyers to depose one of the architects of the AIG bailout, former Federal Reserve Chairman Ben Bernanke, in spite of government objections.

According to a list of potential witnesses filed by Boies Schiller and Skadden earlier this month, Bernanke won’t be the only notable name called to testify. The list also includes former Treasury secretaries Henry Paulson and Timothy Geithner and former AIG chief Edward Liddy.

Other firms on the list include Sullivan & Cromwell’s H. Rodgin Cohen, who represented AIG’s board; Eric Dinallo, the former superintendent of the New York State Insurance Department, who is now at Debevoise & Plimpton; and Davis Polk & Wardwell’s John Brandow and Marshall Huebner, who advised the U.S. Department of the Treasury.

Additional possible witnesses listed were Richard Beattie and Michael Nathan of Simpson Thacher & Bartlett; Joshua Feltman, Edward Herlihy, Richard Kim and Lawrence Makow of Wachtell, Lipton, Rosen & Katz; and Michael Wiseman of Sullivan & Cromwell.

Meanwhile, Greenberg could be in a state courtroom soon in the role of defendant, with Boies again representing him..

The case has been limping toward trial for nearly a decade, and is on its third attorney general after Eliot Spitzer initiated the action back in 2005 and then left it for Andrew Cuomo and now Eric Schneiderman to pursue.

Over the years, seven of the original state claims against Greenberg, and Howard Smith, the former AIG chief financial officer, were dismissed. And by settling a parallel federal action for $115 million, state damages, as well as New York’s broad Martin Act, are out of the picture. What remains is a case in which Schneiderman is seeking disgorgement of bonuses Greenberg and Smith received, plus injunctive relief to bar the two from the securities industry and prevent them from serving as directors or officers of a public company.

At its core, the case is about two transactions that took place some 15 years ago.

One involves Berkshire Hathaway’s General Reinsurance Corp. (GenRe) and a deal allegedly concocted to conceal a decline in AIG’s loss reserves. The other transaction involves the CAPCO Reinsurance Co., an offshore firm controlled by AIG. Schneiderman alleges AIG fraudulently shifted about $200 million in losses from its auto warranty business to a Barbados-based shell company.

AIG admitted to structuring sham transactions and settled with the federal government and the state for a record $1.64 billion in 2005, over the fervent objections of Greenberg, who by that time had been removed as CEO but remained an AIG shareholder. The case slated for trial alleges that both Greenberg and Smith were involved in a decep- tion.

Manhattan Supreme Court Justice Charles Ramos (See Profile) has scheduled trial for the week of Jan. 19.