Schneiderman Can't Shake Spitzer A Spitzer-Era Case Threatens to Egg the AG's Face By Addison Gardiner

Like herpes, Eliot Spitzer just won't go away.

The disgraced former governor of New York breaks out on television as if he had never been busted hiring hookers. He's interviewed in the press as if he never violated the Mann Act, transporting those prostitutes across state lines. New York is even stuck with bogus lawsuits he initiated as the state Attorney General, and his legacy still wags the dog today in the AG's office.

One of those cases is particularly troublesome for serving Attorney General Eric Schneiderman. If emails Spitzer wrote when he was AG come back to bite the former Governor in that litigation, Schneiderman may be the biggest loser.

In May 2005, then-Attorney General Spitzer filed a civil suit against former AIG chief executive Maurice "Hank" Greenberg. The case charged that Greenberg and AIG's former chief financial officer, Howard Smith, orchestrated fraudulent accounting which falsely boosted the company's share price. Spitzer's emails came into question when it was believed they contained evidence of a personal animus held by Spitzer against Greenberg.

If Spitzer was indeed motivated more by political and personal gain and less by evidence, Schneiderman's case will be badly damaged. Republicans are already talking about taking that failure to Wall Street when fundraising to defeat him next year.

To prove Spitzer's animosity, Greenberg's attorneys have aggressively sought his emails when he served as Attorney General and filed a pending motion to dismiss the charges with the Court. Schneiderman's office has resisted releasing the emails. When a May 2012 court order compelled his office to produce the material, the AG refused and filed an appeal claiming "that having to disclose emails and other communications that Mr. Spitzer sent to the media would interfere with law enforcement functions."

Curiously, that obstruction came only after Spitzer complained quite publicly that Schneiderman was not aggressive enough in his efforts to block release of the emails. The disgraced former governor openly questioned Schneiderman's abilities as a lawyer.

Spitzer told the New York Law Journal he was "substantially disappointed" in Schneiderman's lack of action against the court order which "to go uncontested is just poor litigation and makes me wonder about the skills with which (Schneiderman is) handling other cases these days."

At the time, it seemed a gratuitous slap. Today, in light of Schneiderman's role in Sheldon Silver's coverup of sexual abuse in the Assembly, the comments make Spitzer seem prescient. Regardless, Schneiderman changed his tack and filed the appeal.

One can only guess what brand of Spitzer's trademark vitriol towards Greenberg is contained in the emails, but former Attorney General Dennis Vacco gives a clear hint. In an affidavit last July, Vacco recalled an incident from September 2004, before the civil lawsuit was filed, in which Spitzer "gratuitously made several derogatory, deeply personal and highly inappropriate expletive-laden comments about Maurice R. Greenberg and his son Jeffrey W. Greenberg."

Vacco went public with his story after hearing allegations that Spitzer's pursuit of Greenberg may have been more personal than professional.

"I'm now motivated about my concern over these emails and I don't think we ought to have government officials who are prosecutors and law enforcement officials being able to conduct business in a shadowy fashion," Vacco told CNBC after he filed the affidavit. "I believe if these charges were unfounded and politically motivated and now you add to it that there might have been some shadowy email accounts that helped advance the investigation during the investigation, I think that is inappropriate."

Schneiderman has pursued the charges first filed by Spitzer, even as he dropped a claim for damages against Greenberg earlier this year. His lawsuit claims that Greenberg "initiated, negotiated and approved" a transaction with General Re Corp., a unit of Berkshire Hathaway Inc., which increased AIG's loss reserves by $500 million without transferring risk. Schneiderman also references a second transaction, with Capco Reinsurance Co., which concealed a $210 million AIG underwriting loss. Greenberg has vehemently denied wrongdoing.

Greenberg's lawyer, David Boies, told NY's Court of Appeals that the state cannot pursue injunctive relief because it did not include that claim in the initial case before the trial court. He then moved for dismissal.

Should the matter go to trial and if Hank Greenberg succeeds in his efforts to get Eliot Spitzer's emails, New York Attorney General Eric Schneiderman's case will collapse - and he'll be the biggest loser.

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