For years the federal government has been hiding potentially exculpatory evidence involving former AIG CEO Hank Greenberg . And now the feds won’t let him make it public.
That’s according to a bombshell legal memorandum that attorneys for Mr. Greenberg and former AIG executive Howard Smith filed on Monday. They’re asking a federal court in Connecticut to allow them to disclose the evidence that prosecutors still claim should be kept under seal. If Messrs. Greenberg and Smith aren’t able to let the sun shine on this abuse, tainted evidence could be used against them by New York Attorney General Eric Schneiderman in a civil trial due to begin next month.
A Schneiderman predecessor, Eliot Spitzer , began investigating Mr. Greenberg roughly a decade ago for an allegedly fraudulent reinsurance transaction between AIG and Gen Re. But attorneys for Messrs. Greenberg and Smith only learned of the potentially exculpatory evidence last fall as they prepared to go to trial.
The information the feds have been sitting on all these years relates to Richard Napier, a former executive at Gen Re who was the government’s star witness in a separate criminal case over the transaction. Mr. Greenberg was never charged, but a trial initially resulted in convictions in 2008 of one AIG employee and four Gen Re employees. Those convictions were vacated in 2011 by a federal appeals court because of errors by the trial judge, and the appellate judges also made clear what they thought of Mr. Napier’s testimony.
“Compelling inconsistencies suggest that Napier may well have testified falsely,” wrote Chief Judge Dennis Jacobs on behalf of a unanimous three-judge panel of the U.S. Court of Appeals for the Second Circuit. Among the reasons the appellate judges found his testimony “suspicious” was that Mr. Napier, who had struck a deal with prosecutors to avoid prison time, had changed his story on who had committed the alleged fraud. Also, for a key meeting he described in the construction of the alleged fraud, the government could present no evidence that the meeting took place.