Could Spitzer Be Charged Under the Mann Act?

One of the more interesting aspects of the Spitzer prostitution scandal is the possibly of a charge under the Mann Act. It is quite a difference for the governor. Under the Mann Act, he could be looking at 20 years while under the D.C. law it would be only 90 days.

The Mann Act makes it illegal to persuade or induce an individual to cross state lines for the purpose of prostitution. It is rarely used against “johns”, but it can technically be used against Spitzer. It has been used in past celebrity cases, click here.

The district law allows for only 90 days for a first offender.

District of Columbia District of Columbia Code DIVISION IV CRIMINAL LAW AND PROCEDURE AND PRISONERS TITLE 22 CRIMINAL OFFENSES AND PENALTIES

§ 22-2701. Engaging in prostitution or soliciting for prostitution.

It is unlawful for any person to engage in prostitution or to solicit for prostitution. The penalties for violation of this section shall be a fine of $500 or not more than 90 days imprisonment, or both, for the first offense, a fine of $750 or not more than 135 days imprisonment, or both, for the second offense, and a fine of $1,000 or not more than 180 days imprisonment, or both, for the third and each subsequent offense.

Given the reports that New York Governor Eliot Spitzer was heard on a wiretap arranging for a prostitute to travel from New York to Washington to meet in his hotel room, it appears that he has violated the Mann Act. This federal law carries a penalty of up to 20 years imprisonment for knowingly persuading or inducing any individual to cross state lines for the purposes of prostitution. Governor Spitzer also appears to have violated District of Columbia law, making it unlawful for any person to engage in prostitution or to solicit for prostitution. This is punishable by up to 90 days in jail, or a fine of up to $500, or both, for the first offense.

It appears, however, that there are allegations of money laundering, but it is not clear that Spitzer was allegedly involved in such activities. There is also the danger that he may have given false statements to investigators or acted in a way that could result in obstruction charges. Finally, this conduct could be the based for an impeachment proceeding unless, as expected, he resigns.

35 Responses to “Could Spitzer Be Charged Under the Mann Act?”


  1. 1 mespo727272 1, March 11, 2008 at 11:11 am

    I suspect a fall from grace (damn! why couldn’t he be the mayor of NYC and then I could have said “Gracie Mansion”) would be enough to satisfy the lords of the DOJ. What’s a fine and suspended jail time going to accomplish? Thomas Adams had it right when he said: “The ambitious climbs up high and perilous stairs, and never cares how to come down; the desire of rising hath swallowed up his fear of a fall.” Ambition is a jealous, stupefying, and fickle mistress.

  2. 2 Bob Esq. 1, March 11, 2008 at 12:48 pm

    Is this a trick question? Because the District of Columbia isn’t heading up the investigation.

    Per Federal conviction under the Mann Act; the case would have to rely heavily on the passive language of the statute regarding “induce” & “entice.”

    http://caselaw.lp.findlaw.com/casecode/uscodes/18/parts/i/chapters/117/sections/section_2422.html

    It appears that the case could be made technically; however the mere idea of sentencing someone to twenty years for soliciting a prostitute brings jury nullification to mind.

    Regards,

    Bob

  3. 3 Susan 1, March 11, 2008 at 1:02 pm

    Mespo727272
    What’s a fine and suspended jail time going to accomplish?
    ***************

    NOTHING! As far as I’m concerned, anyway. His resignation would be enough for me, if it turns out to be true, and it seems to me that to use the Mann Act against Gov. Spitzer, which I understand carries a maximum of 20 years in prison, would be an act of malicious prosecution. I do not agree with the current mindset of using draconian prison sentences to punish people who have not inflicted (or are accused of inflicting) murder, or any kind of physical injury or harm to anyone. Just my opinion, though, which I know many will disagree with.

  4. 4 Vince Treacy 1, March 11, 2008 at 1:59 pm

    To Bob and the lawyers, I am not sure, but I think that a misdemeanor indictment would have to be returned by a grand jury in the DC Superior Court. By a local quirk, the DC Assistant US Attorneys present the cases to these grand juries. So the federal prosecutors have full control of this threat as an arrow in their quiver.

    Ironically, the central issue at midday Tuesday is prosecutorial discretion, with tremendous power now lodged in the hands of the Justice Department.

    tt is very likely that the examples of Eliot’s own record of the exercise of like discretion over the past decade will be scrutinized by his antagonists.

  5. 5 Bob Esq. 1, March 11, 2008 at 2:08 pm

    And here’s a tad more interesting story taking a back seat to the Spitzer scandal:

    Playing Constitutional Chicken

    Trying to avoid setting a new precedent for legislative toothlessness, the House yesterday filed a civil suit against the Bush White House, requesting that a federal judge enforce subpoenas seeking information about the controversial firings of U.S. attorneys.

    In the latest chapter of what has turned into a fairly momentous Constitutional standoff, it will be up to the judicial branch to determine whether the legislative branch can exercise any meaningful oversight over the White House — or whether the White House can simply opt out at will.

    http://www.washingtonpost.com/wp-dyn/content/blog/2008/03/11/BL2008031101354_pf.html

  6. 6 Bob Esq. 1, March 11, 2008 at 2:21 pm

    “[It] is very likely that the examples of Eliot’s own record of the exercise of like discretion over the past decade will be scrutinized by his antagonists.”

    Prosecutorial discretion will undoubtedly be determined by the political gain, if any, that could be achieved by prosecuting Spitzer. Professor Turley would be the best to ask about this, but in the absence of a prosecutor hard up for recognition, I fail to see anyone prosecuting this case without risking being dragged down by the [potential] three ring circus created by the trial.

  7. 7 Patty C 1, March 11, 2008 at 2:43 pm

    Wooooooooohooooooooo -I love it!

    “…William Branigin writes in The Washington Post: “The committee’s action marked the first time in U.S. history that either chamber of Congress has sued the Executive Branch to enforce a subpoena, according to a spokesman for the House Judiciary Committee. . . .

    “White House spokeswoman Dana Perino accused the committee of engaging in ‘partisan theater.’

    “She told reporters, ‘The confidentiality that the president receives from his senior advisers and the constitutional principle of separation of powers must be protected from overreaching, and we are confident that the courts will agree with us.’”

    Neil A. Lewis writes in the New York Times: “Prof. Orin S. Kerr, a constitutional scholar at George Washington University, said the case would raise fresh issues.

    “The Supreme Court first formally recognized the notion of executive privilege in 1974, but the court also said it could be overcome in some circumstances like a criminal investigation.

    “There has been no ruling about whether such a privilege outweighs a request by Congress for White House information to perform its oversight of the executive branch. In the handful of cases since then, the White House has reached compromises with Congress or others.”…

  8. 8 deeply worried 1, March 11, 2008 at 2:56 pm

    Bob Esq.,

    Thank you for bringing up the civil action. There might be a thread on that one of these days….

    But back to Spitzer, prosecutorial discretion is not as important in Spitzer’s case as the motives behind the prosecutors. What triggered this investigation? Was it an IRS referral? Why is the Public Integrity Section of the DOJ so heavily involved? This is not to excuse the immoral and stupid governor. But something isn’t right here.

  9. 9 deeply worried 1, March 11, 2008 at 2:59 pm

    Thanks Patty C.

    My read is that Bolton’s documents are covered, Meirs’ non-appearance is not.

    DW

  10. 10 Bob Esq. 1, March 11, 2008 at 4:09 pm

    “But back to Spitzer, prosecutorial discretion is not as important in Spitzer’s case as the motives behind the prosecutors. What triggered this investigation? Was it an IRS referral?”

    I just caught a glimpse of saw Alan Dershowitz on MSNBC. He said that ‘every criminal attorney he knows thinks the IRS/Banking investigation is a front;’ and that they ’smell a rat.’

    Personally I wouldn’t be surprised if this gem turned up during data mining sans FISA and thence handed over on a ‘Silver Platter’ albeit under the table.

  11. 11 Patty C 1, March 11, 2008 at 4:46 pm

    No s***, Sherlock… ;)

    He pissed off a LOT of people on Wall Steet, like AIG’s Hank Greenberg, and notable others, elsewhere…

    And I didn’t know he went to school with Jim Cramer, who is/was a
    big Romney fan.

    http://en.wikipedia.org/wiki/Eliot_Spitzer

    “Spitzer used a New York statute to allow his office to prosecute cases which have been described as within federal jurisdiction.[7][8] In January 2005, the president of the U.S. Chamber of Commerce described Spitzer’s approach as “the most egregious and unacceptable form of intimidation we’ve seen in this country in modern times”.[9]“

  12. 12 msnbc bs 'er 1, March 11, 2008 at 6:15 pm

    Spitzer needs to RESIGN now and the excuse making here has to stop.

  13. 13 msnbc bs 'er 1, March 11, 2008 at 6:16 pm

    Market up 400 points today. Spitzer was apparently a one man Bear Market. Thank GOD he has been effectively castrated now from hurting the stock markets any more.

  14. 14 msnbc bs 'er 1, March 11, 2008 at 9:55 pm

    Spitzer’s “service provider” ran an ad on the Huffington Post!

    The service, according to a Web ad that ran on the Huffington Post, was reserved “for a select group of educated, refined and successful international clients.” Spitzer met that standard.

    “All rendezvous,” the ad boasted, “are individually-crafted to service the needs of your specific occasion.”

    http://www.philly.com/dailynews/local/20080311_Elmer_Smith__Please_explain__5_500_an_hour_to_me.html

  15. 15 Kevin 1, March 13, 2008 at 1:07 am

    I wish I had the wonderful contacts,even if they are supernatural capabilities akin to ESP or contact with the netherworlds, that some of us here have, insofar as determining that this was accomplished through the FISA act. Aside from that, it would appear that this may be almost as embarrassing for the Justice Department as for Spitzer. I’d sure hate to bring the details of this investigation in front of Mukasey, as he will have heads rolling if this was a fishing expedition about sex, or a politically based prosecution ……ask anyone who knows anything about him. On another note, regarding the supposed U.S. Attorney firings, one has to keep in mind that the congress has no authority to hire or fire U.S. attorneys. They are POLITICAL appointees who serve at the president’s pleasure. Rational people could conclude from that the Congress has no authority in the first place, to investigate the firings, but congress has essentially turned this into theatre that many have bought, hook, line, and sinker. Congress has historically sought to continually expand their “oversight” capabilities over the executive branch. What we are seeing is classical congressional overreaching, and mark my words that the courts will strike down the contempt, and subpeonas of this congressional committee. Of course congress will do some judge shopping and win the first round, but when it reaches the Supreme Court, it will be struck down.

  16. 16 Patty C 1, March 13, 2008 at 4:34 am

    Reread. The word ’sans’ in French means ‘without’ FISA…

    Secondly, Monica Goodling even admitted having “crossed the line”, politically, when screening candidates for DOJ legal staff positions, which is illegal, and which is also why she was first advised to take the 5th before testifying and was then given immunity.

  17. 17 mespo727272 1, March 13, 2008 at 9:29 am

    Kevin:

    You really have a strange take on the concept of equality of the branches of government and the separation of powers doctrine. If an unscrupulous President decided to appoint only attorneys disbarred for various ethical lapses, or maybe mob lawyers to key roles at the DOJ, would Congress have no right to inquire about it? What if another hypothetical and unscrupulous President decided to install only Christian ideologues bent on subverting established law by writing legally suspect memos authorizing,say something as despicable as torture, should Congress sit idly by waiting for the next election? Would you support Congress’ inaction if another President installed leftwing zealots at DOJ who ruled that it is legally permissible to ignore the Constitution’s prohibition against intereference in religion and actually taxed the charlatans masquarading as mega-church leaders and gave the money to the Church of the Flying Spaghetti Monster through “faith based intiatives”? I wonder how your abject prostration before the powers of our Chief Executive would suit you then.

    Oh sorry, example number two really happened and you are still down there. My mistake!

  18. 18 deeply worried 1, March 14, 2008 at 1:33 pm

    Kevin,

    Thank you for intelligent and perceptive post, but you may be wrong on several counts.

    Among them, most tragically, is your comment on forum shopping by Congress for a sympathetic judge. It just doesn’t work that way.

    This action got referred to Judge John D. Bates who has protected the Executive before (see Walker v Cheney where the GAO’s suit was blocked for lack of standing).

    In many ways, a more unsympathetic Judge could hardly have been found and it is all by random assignment on the dockets.

  19. 19 deeply worried 1, March 14, 2008 at 3:17 pm

    A short analysis of the case before Judge Bates.

    Count I is the strongest. Count II and Count III I feel are weaker. Count IV is good. Overall, I think they threw the kitchen sink and could have shortened this considerably. They also raise some interesting questions that perhaps they won’t like the answer to and might have been better off not raising.

    “78. Wherefore, the Judiciary Committee prays that this Court (a) declare that Ms. Miers’s refusal to appear before the Committee in response to the subpoena issued to her was without legal justification and violated her legal obligations; (b)declare that Ms Miers may assert executive privilege in response to Committee questions only in the presence of the Committee and only in response to particular questions; (c) declare that Ms. Miers must testify before the Committee about all subjects not covered by executive privilege; and (d) enjoin Ms. Miers to appear and testify forthwith before the Committee in compliance….”

    (b) is their strongest point. Bates should agree here.

    I was arguing this point on this board some weeks back. There is a lot of grey/contested area but it is incontrovertable that employees are not privileged, only specific testimony. The Executive cannot foreclose the asking of questions by failing to produce anyone to be asked. It must allow the appearance of officials, only then can it invoke privilege to particular questions.

    So my read is that Congress will indeed get Ms Meirs (but not Mr Bolton), as a sop to Congressional dignity, but the appearance will be an excruciating ordeal of privilege claims.

  20. 20 deeply worried 1, March 16, 2008 at 6:52 pm

    I just can’t get my mind off the fact that Judge Bates got the case.

    A little history: The biggest dust-up between the two branches in recent times was Walker (he, the Comptroller General) v. Cheney. As issue was a request to GAO from two committee heads to procure the information around Cheney’s energy taskforce. GAO said “Okay”, but got the privilege stonewall, and it wound up in federal court where Judge Bates was assigned the case. Judge Bates found in favor of the Executive.

    Here is what the GAO had to say about the decision in a press release they issued after the ruling:

    “For a number of reasons, GAO strongly believes the district court’s decision is incorrect. In GAO’s view, the district court misapplied the Supreme Court’s decision in Raines v. Byrd to GAO. Unlike the legislator-plaintiffs in Raines, who sought to invalidate a statute which had been enacted by the Congress, GAO sought to carry out – not invalidate – the information-gathering responsibilities which Congress assigned to it in GAO’s access statute. The district court’s decision thus has prevented GAO from discharging its statutory responsibilities in this case. Furthermore, the opinion was based, in part, on a material factual error relating to the role various Senate chairs played as noted above. The opinion also leads to the highly questionable result that private citizens have more authority to enforce their rights to obtain information from the Executive Branch than the Comptroller General of the United States,acting in his official capacity as head of GAO.

    ———————
    Page 2
    According to Comptroller General Walker, “In the final analysis, transparency and accountability in government are essential elements for a healthy democracy. In America, all public servants, including constitutional officers, work for the people. While reasonable people can disagree on the proper amount of transparency and the appropriate degree of accountability, in the world’s greatest democracy, we should lead by example and base public disclosure on what is the right thing to do rather than on what one believes one is compelled to do. Based on my extensive congressional outreach efforts, there is a broad-based and bi-partisan consensus that GAO should have received the limited and non-deliberative NEPDG-related information that we were seeking without having to resort to litigation. While we have decided not to pursue this matter further in the courts, we hope that the Administration will do the right thing and fulfill its obligations when it comes to disclosures to GAO, the Congress, and the public, not only in connection with this matter but all matters in the future. We hope that GAO is never again put in the position of having to resort to the courts to obtain information that Congress needs to perform its constitutional duties, but we will be prepared to do so in the future if necessary.”

    Now then.

    In the Meirs/Bolton contempt action, the biggest constitutional confrontation since Walker v Cheney, Congress gets the very same judge that decided against them before????

    JT often talks about the “fix being in”. But this is so doggone blatant, I can’t believe the docket wasn’t manipulated.

  21. 21 Patty C 1, March 16, 2008 at 7:42 pm

    Now, this is the link you should have asked me for, DW! ;)

    I read it as her contempt was in not showing up-at all, too.

    http://jonathanturley.org/2008/03/01/mukasey-blocks-any-prosecution-of-bush-officials-for-contempt-of-congress/

  22. 22 deeply worried 1, March 16, 2008 at 8:06 pm

    Patty C,

    Thank you. I never know where to look. I’ve gotten so bad I just post anywhere!

    And I hate to ask you since I do all the time and I’m feeling a little guilty about that! :)

    DW

    BTW: this judge assignment and its implications is almost completely under the radar for the MSM and the blogosphere so far as I can tell…

  23. 23 mespo727272 1, March 16, 2008 at 8:44 pm

    DW:

    There are few things less predictable that the predilections of a federal judge– I hope.

  24. 24 Patty C 1, March 16, 2008 at 10:31 pm

    Not to worry-I got your back ;)

    I am anxious to see what he decides.

    FYI-you can google almost any topic
    under JT + keywords + DW etc

  25. 25 deeply worried 1, March 16, 2008 at 10:59 pm

    Patty C,

    :)

    Mespo,

    I hope you’re right! But the pro-Constitution forces have been obstructed so many times, a certain pessimism, not to mention paranoia has set in!

    DW

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  29. 30 Patty C 1, September 24, 2008 at 4:53 pm

    JT, I posted an article from WaPo under the ‘Bush Loses Ruling on Cheney Records’ thread, which then mysteriously disappeared re Spitzer’s early consumer work with the 50 AG’s involving the OCC etc – yesterday? Was that intentional?

    ——-
    Patty C 1, March 11, 2008 at 4:46 pm

    No s***, Sherlock… ;)
    He pissed off a LOT of people on Wall Steet, like AIG’s Hank Greenberg, and notable others, elsewhere…
    ********

    Interesting timing – on both counts

    Money talks… from NY (CT) to CA
    http://opa.yale.edu/news/article.aspx?status=301&id=2528

    $50 Million Gift to Advance Yale’s China Collaborations

    Published: September 28, 2006

    “New Haven, Conn. — Maurice R. (“Hank”) Greenberg, through his family foundation, and The Starr Foundation are each donating $25 million to Yale to create the Maurice R. Greenberg Yale-China Initiative, advancing the University’s collaborations with China in critical areas, President Richard C. Levin announced today…”

    Note: 8 Million to UC Berkley Library

    ________

    http://www.law.com/jsp/article.jsp?id=1202424481239

    Hank Greenberg and Former AIG Execs to Pay $115 Million to Settle Chancery Court Suit

    Brian Baxter
    The American Lawyer
    September 12, 2008

    Former AIG Chairman and CEO Maurice “Hank” Greenberg and three other former AIG executives have agreed to pay shareholders $115 million to settle claims that they overpaid a company controlled by the one-time insurance kingpin.

    The settlement, which plaintiffs lawyers call the largest ever in a derivative suit in Delaware Chancery Court, comes on the eve of a trial that would have taken place before Vice Chancellor Leo Strine Jr.

    “We started having [settlement] negotiations about six months ago, but they fell apart,” says Stuart Grant, founding and managing partner of noted Delaware’s plaintiffs firm Grant & Eisenhofer. “Then I got a call on Tuesday night, literally on the eve of trial, and by 3 p.m. on Thursday we had a [memorandum of understanding]. So you can say this case settled on the proverbial courthouse steps.”

    The settlement is somewhat surprising considering the Chancery Court is generally considered a safe haven for corporate defendants, Grant says. Chancery Court trials are jury-free; Grant says that Greenberg himself was on the list of witnesses who could be called to testify once proceedings began on September 15. (A spokesperson for AIG did not respond to a request for comment.)

    The case began when the Teachers Retirement System of Louisiana — represented by Grant & Eisenhofer — filed suit against Greenberg, and the former executives in the Chancery Court on Dec. 31, 2002.

    “The suit stems from the relationship between Hank Greenberg and the umbrella of companies under C.V. Starr & Co.,” Grant says. “Hank was managing these companies on the side that were mirror companies of certain AIG companies,” he adds. “And he was diverting AIG business to these companies, which made about a $1 billion over five years that AIG should have made themselves.”

    Grant says that money was used to compensate high-level executives at C.V. Starr and AIG. The case is unrelated to the well-publicized troubles that AIG and Greenberg still face in connection with an investigation initiated several years ago by former New York State AG Eliot Spitzer. (Spitzer’s office ended up filing civil charges, and the 83-year-old Greenberg still faces several civil suits from AIG shareholders, some of which have been filed by clients of Grant & Eisenhofer.)

    Representing Greenberg and C.V. Starr were litigator-to-the-stars David Boies and fellow Boies, Schiller & Flexner litigation partner Lee Wolosky. Greenberg was represented locally by J. Travis Laster of Delaware’s Abrams & Laster with Andre Bouchard of Bouchard Margules & Friedlander serving as C.V. Starr’s local counsel.

    Besides Greenberg, the AIG settling executives included the company’s former CFO Howard Smith, former Vice Chairman of investments Edward Matthews, and former Vice Chairman of insurance Thomas Tizzio.

    John Gardiner, the co-head of the international litigation and arbitration group at Skadden, Arps, Slate, Meagher & Flom, represented Matthews along with litigation partners Jonathan Frank, Edward Welch and associate Michelle Davis.

    Smith was represented by Vincent Sama, a litigation partner in Winston & Strawn’s New York office. Kurt Heyman, a founding partner of Delaware’s Proctor Heyman, served as Smith’s local counsel.

    Tizzio turned to Steven Pearlstein, a partner at New York litigation boutique Kobre & Kim, with Young Conaway Stargatt & Taylor’s Christian Wright providing local counsel.

    Daniel Kramer, cochair of the securities litigation and enforcement group at Paul, Weiss, Rifkind, Wharton & Garrison, represented AIG. David Eagle of Delaware’s Klehr, Harrison, Harvey, Branzburg & Ellers served as the insurance giant’s local counsel.

    Grant says that $29.5 million from the settlement sum will come from Greenberg and the three former AIG executives, with the remaining $85.5 million picked up by AIG’s directors and officers insurance. Being a derivative suit, all of the money will go back to AIG.

    Greenberg’s deposition transcripts will likely not be released to the public, Grant says. In addition to Grant, partner Cynthia Calder, senior counsel Jennifer Heisinger, and associates Catherine Pratsinakis and David Straite rounded out the Grant & Eisenhofer trial team.

    The case was mediated by former U.S. District Court Judge Nicholas Politan Jr.

  30. 31 Patty C 1, September 24, 2008 at 4:56 pm

    JT, I posted an article from WaPo under the ‘Bush Loses Ruling on Cheney Records’ thread, which then mysteriously disappeared re Spitzer’s early mortgage consumer work with the 50 AG’s involving the OCC etc – yesterday? Was that intentional?

    ——-
    Patty C 1, March 11, 2008 at 4:46 pm

    No s***, Sherlock… ;)
    He pissed off a LOT of people on Wall Steet, like AIG’s Hank Greenberg, and notable others, elsewhere…
    ********

    Interesting timing – on both counts

    Money talks… from NY (CT) to CA
    http://opa.yale.edu/news/article.aspx?status=301&id=2528

    $50 Million Gift to Advance Yale’s China Collaborations

    Published: September 28, 2006

    “New Haven, Conn. — Maurice R. (“Hank”) Greenberg, through his family foundation, and The Starr Foundation are each donating $25 million to Yale to create the Maurice R. Greenberg Yale-China Initiative, advancing the University’s collaborations with China in critical areas, President Richard C. Levin announced today…”

    Note: 8 Million to UC Berkley Library

    ________

    From:law.com – jsp/article.jsp?id=1202424481239

    Hank Greenberg and Former AIG Execs to Pay $115 Million to Settle Chancery Court Suit

    Brian Baxter
    The American Lawyer
    September 12, 2008

    Former AIG Chairman and CEO Maurice “Hank” Greenberg and three other former AIG executives have agreed to pay shareholders $115 million to settle claims that they overpaid a company controlled by the one-time insurance kingpin.

    The settlement, which plaintiffs lawyers call the largest ever in a derivative suit in Delaware Chancery Court, comes on the eve of a trial that would have taken place before Vice Chancellor Leo Strine Jr.

    “We started having [settlement] negotiations about six months ago, but they fell apart,” says Stuart Grant, founding and managing partner of noted Delaware’s plaintiffs firm Grant & Eisenhofer. “Then I got a call on Tuesday night, literally on the eve of trial, and by 3 p.m. on Thursday we had a [memorandum of understanding]. So you can say this case settled on the proverbial courthouse steps.”

    The settlement is somewhat surprising considering the Chancery Court is generally considered a safe haven for corporate defendants, Grant says. Chancery Court trials are jury-free; Grant says that Greenberg himself was on the list of witnesses who could be called to testify once proceedings began on September 15. (A spokesperson for AIG did not respond to a request for comment.)

    The case began when the Teachers Retirement System of Louisiana — represented by Grant & Eisenhofer — filed suit against Greenberg, and the former executives in the Chancery Court on Dec. 31, 2002.

    “The suit stems from the relationship between Hank Greenberg and the umbrella of companies under C.V. Starr & Co.,” Grant says. “Hank was managing these companies on the side that were mirror companies of certain AIG companies,” he adds. “And he was diverting AIG business to these companies, which made about a $1 billion over five years that AIG should have made themselves.”

    Grant says that money was used to compensate high-level executives at C.V. Starr and AIG. The case is unrelated to the well-publicized troubles that AIG and Greenberg still face in connection with an investigation initiated several years ago by former New York State AG Eliot Spitzer. (Spitzer’s office ended up filing civil charges, and the 83-year-old Greenberg still faces several civil suits from AIG shareholders, some of which have been filed by clients of Grant & Eisenhofer.)

    Representing Greenberg and C.V. Starr were litigator-to-the-stars David Boies and fellow Boies, Schiller & Flexner litigation partner Lee Wolosky. Greenberg was represented locally by J. Travis Laster of Delaware’s Abrams & Laster with Andre Bouchard of Bouchard Margules & Friedlander serving as C.V. Starr’s local counsel.

    Besides Greenberg, the AIG settling executives included the company’s former CFO Howard Smith, former Vice Chairman of investments Edward Matthews, and former Vice Chairman of insurance Thomas Tizzio.

    John Gardiner, the co-head of the international litigation and arbitration group at Skadden, Arps, Slate, Meagher & Flom, represented Matthews along with litigation partners Jonathan Frank, Edward Welch and associate Michelle Davis.

    Smith was represented by Vincent Sama, a litigation partner in Winston & Strawn’s New York office. Kurt Heyman, a founding partner of Delaware’s Proctor Heyman, served as Smith’s local counsel.

    Tizzio turned to Steven Pearlstein, a partner at New York litigation boutique Kobre & Kim, with Young Conaway Stargatt & Taylor’s Christian Wright providing local counsel.

    Daniel Kramer, cochair of the securities litigation and enforcement group at Paul, Weiss, Rifkind, Wharton & Garrison, represented AIG. David Eagle of Delaware’s Klehr, Harrison, Harvey, Branzburg & Ellers served as the insurance giant’s local counsel.

    Grant says that $29.5 million from the settlement sum will come from Greenberg and the three former AIG executives, with the remaining $85.5 million picked up by AIG’s directors and officers insurance. Being a derivative suit, all of the money will go back to AIG.

    Greenberg’s deposition transcripts will likely not be released to the public, Grant says. In addition to Grant, partner Cynthia Calder, senior counsel Jennifer Heisinger, and associates Catherine Pratsinakis and David Straite rounded out the Grant & Eisenhofer trial team.

    The case was mediated by former U.S. District Court Judge Nicholas Politan Jr.


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