Fraud trial of AIG boss Hank Greenberg finally gets under way

Hank Greenberg, the 91-year-old insurance industry legend, walked into the 89-year-old Manhattan state courthouse building on Tuesday to defend his reputation from state fraud charges that felt like they were just as old.

But the case against the former chief executive of AIG, court records show, is just 11 years old.

After the long and tortured pre-trial windup — during which seven of the nine original charges were tossed — David Ellenhorn, senior enforcement counsel of the Attorney General’s Office, got right into it, fingering Greenberg as being “legendary for being a great micromanager” who personally orchestrated two sham insurance transactions that hid money on the company’s books in order to hide embarrassing losses.

Greenberg’s wealth and reputation grew because of the alleged fraud, Ellenhorn told the court.

Greenberg stands to lose as much as $25 million in bonuses plus a reputation carved over 40 years of leading AIG.

But David Boies, Greenberg’s longtime lawyer, pushed back against that argument in his opening statement, calling the state’s case — started by Eliot Spitzer, continued by Andrew Cuomo and now pushed across the finish line by Attorney General Eric Schneiderman — “devoid of any admissible evidence that ties Mr. Greenberg to anything that was improper in these transactions.”

Schneiderman’s office is looking to bar Greenberg from serving on the board of a public company and to keep him from working in the securities industry — in addition to hoovering up the massive bonus payments.

At the center of the state’s civil case lie two transactions, totaling about $500 million, that duped shareholders into thinking AIG was healthier than it actually was.

Greenberg ordered both of them, which were designed to limit the amount of liability the company would take on.

Both sides agree the transactions took place.

The state argues that Greenberg was the mastermind. Boies claimed the chief executive knew nothing about them — that they were twisted into improper transactions by underlings.

Ellenhorn argued that in one transaction, which was initiated on Halloween 2000, Greenberg had made “an oral side agreement” with Ron Ferguson, the CEO of rival Gen Re, to hide the company’s liabilities.

Boies denied this. Greenberg had wanted a legitimate transaction, he said.

“There simply is no evidence to contradict the fact that on Oct. 31, Mr. Greenberg asks for an entirely legit transaction,” Boies said.

Greenberg appeared spry and unworried in court. At one point, he signed the courtroom portraitist’s sketch of him sitting in the courtroom.

After the session ended for the day, he told reporters in a low voice that he was on his way to Argentina on business.

At times, Justice Charles E. Ramos seemed liked he too would rather be in Buenos Aires — or anyplace other than the 60 Centre St. courthouse.

As the lawyers unspooled their cases built on minutiae of insurance law, Ramos at one point seemed to be propping his head up.

The trial could take up to six months.