A federal jury on Tuesday ruled that a $4-billion endowment that is owned by the Starr International Foundation was not improperly seized from a fund set up to pay bonuses to employees of AIG.
The ruling makes it likely that that the Switzerland-based foundation will hold on to its assets. The Starr International Foundation has made grants worth $27-million since it was created in 2006, including grants to a number of charities based in New York City.
The verdict followed a three-week trial in federal court in New York that focused on the four-decade history between AIG and Starr International Company, which is owned by the foundation. (For more background on the case, see this article from The Chronicle’s archive.)
AIG and Starr International Company were governed by nearly identical boards for most of that period, and both were headed by Maurice R. Greenberg, AIG’s long-time chief executive. Starr International’s Company’s assets were primarily used to pay bonuses to AIG employees until 2005, when Mr. Greenberg was forced out of AIG. Shortly after he was forced out, Mr. Greenberg ended the bonus plan.
During the trial, lawyers for AIG showed videos of Mr. Greenberg telling employees that shares of AIG owned by Starr International Company were being “held in trust” for them. But Mr. Greenberg’s lawyers produced written documentation that Starr International Company’s assets had long been held in a charitable trust. The trust was converted into the Starr International Foundation in 2006.
The jury ruled for Starr International Company after just five hours of deliberation.
“We are gratified by the jury’s quick and complete vindication of Starr International and Mr. Greenberg,” Liz Bowyer, a spokeswoman for Starr International Company, said in a statement.
Officials of the Starr International Foundation referred questions to Mr. Greenberg, who did not immediately return phone calls.
In an additional advisory opinion, the jury found that Mr. Greenberg did not violate a trust when he removed the assets from the AIG bonus plan. Jed S. Rakoff, the federal judge presiding over the trial, said he would write the controlling decision on whether a trust was violated, making his own “findings of fact” but taking the jury’s finding into account. He said he would issue his decision by the end of August.
“We are disappointed by the jury’s verdict and we await the court’s final ruling,” said Mark Herr, an AIG spokesman “We continue to believe in the merits of our case.”