Hearsay! Hearsay!Three days into the long-delayed state-court trial of former American International Group Chairman Maurice R. "Hank" Greenberg for alleged civil fraud, that cry has rung through the courtroom several times already.
In a word, it reflects much of the defense strategy.
The New York Attorney General's office contended in its opening statement Tuesday that Mr. Greenberg "designed, created, negotiated, implemented every major aspect" of two allegedly fraudulent transactions between 2000 and 2003 to mislead AIG shareholders into believing the insurance conglomerate's results were better than they were.
But in his opening statement Tuesday, David Boies, Mr. Greenberg's long-time lawyer, countered that there is "not a single witness who will testify that they informed" Mr. Greenberg of illegitimate elements, and "there is not a single document sent to or from Mr. Greenberg that suggests" he was told or knew of unlawful activity.
He said the state'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."
One of the two transactions is a reinsurance arrangement that AIG entered into with Berkshire Hathaway's General Re unit, to allegedly help AIG improperly boost its claims reserves in 2000 and 2001 by $500 million, misleading investors about the amount of losses that AIG could absorb. Berkshire isn't named as a defendant in the lawsuit.
The state launched testimony in the trial's opening week by calling to the stand Christian Milton, a former AIG executive who had been the insurer's point person in dealing with General Re on the transaction and who now works at Starr Cos., an insurance and investment firm Mr. Greenberg has run since leaving AIG in 2005.
In court three days this week, Mr. Boies repeatedly resisted use of emails or other materials that indirectly seemed to tie in Mr. Greenberg.
"Objection. Hearsay three levels down," Mr. Boies said at one point. He was objecting to a state attorney's question to Mr. Milton that referred to what one General Re executive reportedly told Mr. Milton about a conversation he had had with the then-General Re CEO, in which the General Re CEO purportedly relayed a conversation with Mr. Greenberg, according to a transcript of Wednesday's proceedings.
On another occasion, Mr. Boies objected to a document as "hearsay within hearsay." That involved the state's reference to a document in which a former AIG executive referred to another conversation.
The judge sustained both objections.
Mr. Milton recalled just two very brief conversations with Mr. Greenberg about the General Re deal, and one of those was when he was instructed to get in touch with General Re about the transaction.
In questioning Mr. Milton, the state highlighted unusual elements of the arrangement, including what it called a "secret side agreement" affecting terms of the deal.
The lawsuit was brought in 2005 by then-New York Attorney Eliot Spitzer.
The state is expected to call Mr. Greenberg to take stand on Sept. 27, when the trial resumes.