AIG 2011 Annual Report Download - page 330

American International Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
claims unspecified amounts of carried interest on certain additional real estate assets of AIG and its affiliates. He
also seeks punitive damages for the alleged breaches of fiduciary duties. Defendants assert that Fitzpatrick has
been paid all amounts currently due and owing pursuant to the various agreements through which he seeks
recovery. As set forth above, the possible range of loss to AIG is $0 to $274 million, although Fitzpatrick claims
that he is also entitled to additional unspecified amounts of carried interest and punitive damages.
Defendants filed counterclaims against Fitzpatrick and a motion to dismiss. On September 28, 2010, the Court
dismissed the Defendants’ counterclaims, and denied Defendants’ motion to dismiss. On March 14, 2011, both
plaintiffs and defendants filed motions for partial summary judgment. Those motions are still pending, and no trial
date has been set.
Behm matter. Frank Behm, former President of AIG Global Real Estate Asia Pacific, Inc. (‘‘AIGGREAP’’),
has filed two actions in connection with the termination of his employment. Behm filed an action on or about
October 1, 2010 in Delaware Superior Court in which he asserts claims of breach of implied covenant of good
faith and fair dealing for termination in violation of public policy, deprivation of compensation, and breach of
contract. Additionally, on or about March 29, 2011, Behm filed an arbitration proceeding before the American
Arbitration Association alleging wrongful termination, in which he seeks the payment of carried interest or
‘‘promote’’ distributed through the SPEs, based on the sales of certain real estate assets. Behm also contends that
he is entitled to promote as a third-party beneficiary of Kevin Fitzpatrick’s employment agreement, which, Behm
claims, defines broadly a class of individuals, allegedly including himself, who, with the approval of AIG’s Chief
Investment Officer, became eligible to receive promote payments. Behm is claiming approximately $33 million in
carried interest. Multiple AIG entities (the AIG Entities) are named as parties in each of the Behm matters. The
AIG Entities have filed a counterclaim in the Delaware case, contending that Behm owes them approximately
$3.6 million (before pre-judgment interest) in tax equalization payments made by the AIG Entities on Behm’s
behalf.
Both matters filed by Behm are premised on the same key allegations. Behm claims that the AIG Entities
wrongfully terminated him from AIGGREAP in an effort to silence him for voicing opposition to allegedly
improper practices concerning the amount of AIG reserves for carried interest that Behm contends is due to him
and others. The AIG Entities contend that their reserves are appropriate, as Behm’s claim for additional carried
interest are without merit. Behm claims that, when he refused to accede to the AIG Entities’ position as to the
amount of carried interest due, he was targeted for investigation and subsequently terminated, purportedly for
providing confidential AIG information to a competitor, and its executive search firm. Behm argues that he did
not disclose any confidential information; instead, he met with several of the competitor’s representatives in order
to foster interest in purchasing AIGGREAP.
The parties have finalized the selection of the arbitration panel and the arbitration hearing dates have been set
for May 2012. No trial date has been set in the Delaware action. As set forth above, the possible range of loss to
AIG is $0 to $33 million, although Behm claims that he is also entitled to additional unspecified amounts of
carried interest and punitive damages.
False Claims Act Complaint
On February 25, 2010, a complaint was filed in the United States District Court for the Southern District of
California by two individuals (Relators) seeking to assert claims on behalf of the United States against AIG and
certain other defendants, including Goldman Sachs and Deutsche Bank, under the False Claims Act. Relators filed
a First Amended Complaint on September 30, 2010, adding certain additional defendants, including Bank of
America and Soci´ et´ e G´ en´ erale. The amended complaint alleges that defendants engaged in fraudulent business
practices in respect of their activities in the over-the-counter market for collateralized debt obligations, and
submitted false claims to the United States in connection with the FRBNY Credit Facility and the Maiden Lane
Interests through, among other things, misrepresenting AIG’s ability and intent to repay amounts drawn on the
FRBNY Credit Facility, and misrepresenting the value of the securities that the Maiden Lane Interests acquired
316 AIG 2011 Form 10-K