August 24, 2017
On August 22, 2017, Weil obtained the complete dismissal with prejudice of a False Claims Act (FCA) and securities fraud “qui tam” complaint pending in the U.S. District Court for the Southern District of New York. A relator plaintiff filed the complaint under seal in July 2016, purportedly on behalf of the United States and the State of New York. The complaint was unsealed in February 2017 after the United States and New York declined to intervene.
The complaint brought seven claims against AIG, alleging violations of the federal and New York FCA and the federal securities laws. It also named as defendants Hank Greenberg, AIG’s former Chairman and CEO, Howard Smith, AIG’s former CFO, and Starr International, among others. The complaint alleged that AIG conspired to insure Mafia-controlled businesses in the 1980s, improperly accounted for its acquisition of an electrical contractor in the 1990s, and paid unreported commissions to another defendant for originating these transactions. Plaintiff’s FCA and securities claims were premised on AIG’s alleged failure, decades later, to disclose these dealings to the government in connection with 2006 regulatory settlements and transactions undertaken with the U.S. government during the 2008 financial crisis.
Following briefing on the defendants’ motions to dismiss, the Court issued an opinion on August 22 dismissing all claims with prejudice. Calling the case “entirely frivolous … with no basis in fact or law,” the Court agreed with Weil’s arguments that the relator (1) failed to plead any plausible Mafia conspiracy, (2) failed to plead a false claim or statement under the FCA, (3) lacked standing to bring the securities claims, and (4) asserted time-barred claims.