The Attorney General as Captain Ahab The NY AG Runs Amok By Ken Langone

Mr. Langone, a former director of the New York Stock Exchange and co-founder of Home Depot, is chairman of Invemed Associates.


When a New York attorney general brings a lawsuit against a prominent business person, there are two things you can count on out of that office—lots of political bluster and little accountability.

Unfortunately, I have firsthand experience of the office's excesses. When then New York Attorney General Eliot Spitzer sued me in 2003 over my stewardship as a director of the New York Stock Exchange, the NYSE's legal expenses were more than $100 million, which made it perhaps the priciest litigation in the state's history. The number of TV interviews, press gaggles, photo-ops and speeches Mr. Spitzer indulged in must also have set a record.

But in the end, as often happens in cases where defendants are in the right and stand their ground against legal bullies, the court threw out all charges, proving the case a total waste of time and resources. Mr. Spitzer refused to say how much his office had spent in his pointless endeavor, and he has never expressed a syllable of remorse to the state's taxpayers for his folly.

Now, my good friend Hank Greenberg, the former longtime chairman of AIG, finds himself in the ninth year of a similarly absurd legal steeplechase with the New York attorney general's office. It started in 2005, when Mr. Spitzer insisted on ABC's "This Week" that Mr. Greenberg had engaged in criminal fraud. But that single act of empty bluster has now outlived Mr. Spitzer's disgraced tenure in public office.

No criminal charges were ever presented to a court, of course, since the whole point was to get the attention of journalists, not court reporters. Instead, the case was relegated to civil court where it has been slowly whittled down to an academic argument about an obscure form of reinsurance that has been around in the insurance industry for ages, and that had no impact on the bottom line of AIG's financials.

Taxpayers would be right to wonder what principle of justice is served by this boondoggle. Since the current attorney general, Eric Schneiderman, is keeping the public in the dark about how much he has spent or how many hours his team have racked up persecuting Hank, New Yorkers will never know how much they've already lost.

Nor is there any chance taxpayers will be made whole at trial's end, since Mr. Schneiderman was forced to withdraw claims for monetary damages. He's seeking instead to bar Hank from working in the securities industry or serving on the board of a public company, neither of which Hank currently does. To help his chances of securing this empty "victory," Mr. Schneiderman has asked that Hank be denied a jury trial, resting his hopes on the honorable New York Supreme Court Justice Charles Ramos (who presided over my own ordeal and seemed to enjoy his time in the spotlight immensely).

A lawsuit with no legal precedent, seeking no damages, from no jury, in the name of stopping something that isn't happening? Only in New York.

The awful truth is that this decade-long crusade against Hank Greenberg is one giant, pathetic exercise in face-saving. You see, when Mr. Spitzer managed to strong-arm the board into forcing Hank out of the company he helped build, AIG had a strong balance sheet and a healthy risk profile. It was Hank's Spitzer-approved successors who took all the brakes off and led AIG down the path to ruin and government takeover.

Mr. Spitzer could never bring himself to admit he was wrong or take any responsibility for his part in almost destroying AIG. And even though members of both parties have called for the suit to be dropped (including former Govs. Mario Cuomo and George Pataki on this very page), Mr. Spitzer's Democratic successors have kept his quixotic quest alive to distract from his folly. Mr. Schneiderman's supporters should be especially annoyed that he is squandering precious resources on this case, since he was elected in 2010 at the height of "Occupy Wall Street" and promised to run real bad guys out of town, not straw men.

Hank is a decorated World War II veteran and the builder of successful businesses that have employed thousands and helped millions. His legacy is secure. Which makes the New York attorney general office's pointless vendetta all the more embarrassing.


Mr. Langone's article first appeared in the Wall Street Journal on July 9, 2014.

Home | About Us | Advertise | Privacy Policy | Contact