"It only took eight years for the Second World War to be fought and resolved. This [case] is a little longer," David Ellenhorn, a senior trial lawyer for the state, declared in his opening statement, according to a trial transcript. "But here we are finally, the day of reckoning for Mr. Greenberg and Mr. Smith; the day on which the government can put forward the evidence of two frauds."

Boies, for his part, countered that "Mr. Ellenhorn's opening statement was filled with colorful accusations, assumptions and speculations but devoid of a single piece of admissible evidence that ties Mr. Greenberg to any improper aspect of either of the two transactions that are still at issue.

Courtroom drama expected

And yet the real fireworks in the trial may start Tuesday, Sept. 27. That is when Greenberg, the former billionaire executive who grew AIG into the world's largest insurance company, will take the stand to face off with lawyers from the office of New York's current attorney general, Eric Schneiderman.

Greenberg, now 91, is expected to match wits and guile against government lawyers for a day or longer. And Boies has told news outlets in recent weeks that Greenberg wanted to go to trial, where he intends to clear his name and work to preserve his legacy as one of most prominent business titans of the last century who has also given immensely to charities.

It could make for dramatic theater in a case focused on nuanced and difficult-to-follow transactions involving reinsurance, losses and accounting rules. 

In one of those alleged transactions, Schneiderman's office claims that Greenberg and Smith helped orchestrate a fraudulent reinsurance deal between AIG and General Reinsurance Corp. The transaction allegedly pumped up AIG's reserves by $500 million in 2000 and 2001, deceiving Wall Street analysts and investors about the level of losses AIG could handle.

In the other transaction, Greenberg stands accused of playing a hands-on role in using an offshore reinsurer, which was controlled by AIG, to change underwriting losses linked to a company auto-warranty business into capital losses. Those capital losses, the government says, were not viewed by investors to be as harmful or important as those coming from underwriting.

Vincent Sama, a partner at Kaye Scholer, is leading Smith's defense in the case.

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New York Attorney General Eric T. Schneiderman speaks during a news conference, Feb. 11, 2016, in New York. (Photo: AP/Mary Altaffer)

Here are three key points to watch for as the trial kicks into gear this fall and possibly runs into the winter:

Greenberg's testimony

Greenberg, who left AIG in 2005 when the company faced regulatory and internal investigations over its accounting, appears to have taken the state's lawsuit against him personally. He has publicly criticized what he views as the political nature of the suit started by Spitzer, and Boies has argued in court papers that Spitzer was motivated by personal animus against Greenberg because, in the mid-2000s, Greenberg loudly criticized his "prosecutorial excesses."

AIG was the core of Greenberg's life for nearly four decades and he has been fighting for the last decade to protect his reputation. "Under Mr. Greenberg's stewardship, AIG grew from a modest enterprise into the largest insurance company in history," Boies wrote in the opening paragraph of a pretrial memorandum. "AIG employed over 92,000 individuals, operated in 130 countries, served approximately 40 million customers, and had a market capitalization of over $170 billion."

In the years after Spitzer has left the arena, Schneiderman has not backed down. In a news release this summer, Schneiderman's spokesman said the current AG "is seeking to demonstrate that there is one set of rules for everyone—and that no one, no matter how rich or powerful, can evade responsibility for misconduct."

Greenberg's ability to handle a tough examination by Ellenhorn, or one of his colleagues, may ultimately decide the day.

The former CEO will look to disassociate himself from the wrongdoing allegedly connected to the transactions. The central defense for him and Smith is that the men did not work on—and cannot be shown to have ordered or worked on—the sham portions of the transactions outlined by the government.

Besides potentially damaging his legacy, Greenberg, if he were to lose the trial, may be forced to forfeit—along with Smith—millions of dollars in past bonuses plus interest. In addition, under injunctive relief requested by the government, he and Smith may be banned from both the securities industry and from acting as a public company's officer or director. 

Richard Napier's deposition

A central witness for the Attorney General's Office is Richard Napier, a former senior vice president at General Reinsurance who Ellenhorn wants to use to tie Greenberg and Smith to the allegedly fraudulent transactions.

Near the start of the trial, the government wanted Ramos to watch some 13 hours of deposition testimony given by Napier years ago. But Boies raised hearsay objections.

Ramos has tabled Napier''s deposition testimony until he makes determinations on the hearsay argument. Whether Ramos watches Napier—and if so, how much he views of it—along with how the judge weighs the credibility and importance of that testimony, may be pivotal, according to Maria Patterson, a business ethics and law professor at the Stern School of Business at New York University who has been following the trial.

Impact of bench trial format

Patterson said in an interview that Ramos has had the case since its 2005 inception. That he knows the facts and allegations intimately will alter how the attorneys try the case, she said, adding that both sides will likely shape arguments based on his views of the case as expressed in previous rulings and statements from the bench.

"Nobody is going to be making grand speeches, as you might to a jury, because what's the point, this judge is presiding," she said. "He knows the story here. … What I would do is get the witnesses on, have them testify, and not do a dog-and-pony-show trial."

Under state law, Greenberg and Smith are not afforded a jury trial because the government is not asking for damages but rather a forfeit of past bonuses.

Damages were once sought in the long-running case. But in 2013, both Greenberg and Smith were included as parties in a $115 million settlement in a federal class action lawsuit, brought by former AIG stockholders, that included similar allegations as those made in this case. Under res judicata legal principles, the government cannot seek damages already paid out in the class action.

Jason Grant is a former practicing lawyer. From 2002 to 2008, he handled legal matters on behalf of AIG. He was not involved with and had no knowledge of the transactions underlying the case. He can be reached via email at [email protected] or on Twitter @JasonBarrGrant.

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