American International Group, which is receiving between $152 billion and $163 billion so far in taxpayer bailout funds, has sued the federal government to recover over $306 million for 1997 taxes, penalties and interest that the insurance company claims it was illegally charged.
The company filed the suit in U.S. District Court for the State of New York. “On or about August 25, 2008, plaintiff duly filed a claim for refund demanding a refund of the amounts, including penalties and interest, erroneously assessed by the IRS,” said the complaint. “More than six months have passed since plaintiff filed the 1997 deficiency-related refund claim and the 1997 restatement refund claim, and the IRS has not rendered a decision within that time.”
Separately AIG’s founder, Maurice “Hank” Greenberg, sued the company Monday for securities fraud, claiming the company deceived him by presenting a healthier picture of its financials and derivatives contracts, including its troubled portfolio of credit default swaps, than was warranted, leading him to exercise options to buy 3.7 million shares early last year that have since plunged in value.
Greenberg paid $70 million in taxes after exercising the options and he wants AIG to pay him for the difference over what he would have owed had he not been so deceived. AIG in response pointed out that Greenberg was directly responsible for creating the unit that led to the money-losing derivatives contracts.
“It strains common sense to accept Greenberg’s allegations that he was misled or did not appreciate the risks from the multisector CDS book written by AIG,” said the company, according to The Wall Street Journal.
