NEW YORK, April 13 -- Former American International Group Inc. chief executive Maurice R. "Hank" Greenberg's transfer of more than $2 billion worth of AIG shares to his wife probably would not survive a court challenge, legal experts said Wednesday.
Greenberg, who faces shareholder lawsuits and who has been questioned in a federal and state investigation into AIG accounting, disclosed in a regulatory filing on Tuesday that he gave his wife, Corinne P. Greenberg, 41.4 million AIG shares, most of his holdings in the company.
Maurice R. "Hank" Greenberg stepped down in March.
_____The AIG Story_____
AIG Ex-Chief Cast as Spitzer's Latest Target (The Washington Post, Apr 13, 2005)
Buffett Briefed on AIG Deal (The Washington Post, Apr 12, 2005)
Buffett Testimony To Clarify Gen Re Deal (The Washington Post, Apr 9, 2005)
AIG Probes Renew Debate On Regulation (The Washington Post, Apr 2, 2005)
AIG in Damage Control (The Washington Post, Apr 1, 2005)
Breadth of Company's Problems Stands Out (The Washington Post, Apr 1, 2005)
The transfer of stock worth about $2.1 billion, based on AIG's closing price of $51.61 on Wednesday, occurred on March 11, three days before Greenberg stepped down as AIG's chief executive. Legal experts said the gift appeared to be an effort to shield most of Greenberg's fortune from possible attempts at recovery by the government or private lawsuits.
Through a spokesman, Greenberg declined to comment. A person close to him said that the transfer was largely to protect against frivolous lawsuits and that Greenberg does not expect the shares to be out of the government's reach if it sought to recover assets. Greenberg has not been accused of any wrongdoing.
The person said that by law Greenberg did not have to report the transfer to the SEC until February 2006. The person, who spoke only on the condition of anonymity because of not being authorized to speak on the topic, said Greenberg executed the transfer in consultation with his estate-planning attorneys, not his criminal lawyers.
Thomas A. Dubbs, partner in the law firm Goodkind, Labaton, Rudoff & Sucharow LLP and counsel to Ohio Attorney General James Petro, lead plaintiff in an AIG class-action suit, said he would use the transfer to show that Greenberg knew his actions at AIG were illegal.
"The alleged transfer of stock by Mr. Greenberg to his wife is obviously problematic and it will be argued shows consciousness of guilt," Dubbs said.
Outside legal experts said the money would not be protected if a court concluded that the transfer was intended solely to protect Greenberg from judgments.
"The concept that you can't escape liability by this kind of transfer to your wife or child is pretty well understood," said Robert H. Hermann, a lawyer Thacher, Proffitt & Wood LLP.
Jacob S. Frenkel, a lawyer at Shulman, Rogers, Gandal, Pordy & Ecker PA in Rockville, said the timing, just a few days before Greenberg stepped down and as the AIG investigation gathered steam, makes the transaction "appear suspect."