N.Y. case against Greenberg "devastating": judge

[Mr. Sparkle]

NEW YORK (Reuters) – New York state prosecutors have "a devastating case" against Maurice "Hank" Greenberg, the former American International Group Inc chief executive accused of fraud over a reinsurance transaction 10 years ago, the presiding judge said in court on Tuesday.

After four hours of oral arguments, New York State Supreme Court Justice Charles Ramos reserved ruling on Greenberg's motion to dismiss the case or the office of New York Attorney General Andrew Cuomo's request for summary judgment. The judge did not indicate when he would rule.

Greenberg's attorney David Boies argued that much of the attorney general's case relies on hearsay disputed evidence regarding two conversations Greenberg had with onetime General Re Corp Chief Executive Ronald Ferguson that purportedly sealed the deal.

The judge told Boies that David Ellenhorn, a lawyer in the attorney general's office, "has put together a devastating case, a very strong case, and we both know it. I am very, very much focused on those two conversations Mr. Greenberg had with Mr. Ferguson."

Brought in 2005 by former Attorney General Eliot Spitzer, the case involves a 2000 reinsurance transaction with General Re, a unit of Warren Buffett's Berkshire Hathaway Inc, that boosted AIG's loss reserves by $500 million without transferring risk.

Federal prosecutors have obtained five criminal convictions and two guilty pleas of former General Re and AIG officials over the transaction, including a conviction of Ferguson. He was sentenced to two years in prison.

Robert Morvillo, another Greenberg attorney, told the judge that there was "no independent, non-hearsay evidence that Mr. Greenberg became part of a conspiracy."

He argued that out of 50 depositions in evidence, only the testimony of convicted former GenRe executive Richard Napier said there was an oral side agreement on the transaction. Napier pleaded guilty to a conspiracy charge and was sentenced to probation.

The transaction at issue long preceded taxpayer bailouts of about $180 billion for AIG after it nearly collapsed from mortgage-related losses. The revelation of the GenRe case contributed to Greenberg's ouster in 2005.

http://www.reuters.com/article/idUSN2012459820100420