Story updated with Greenberg comment

NEW YORK( TheStreet) -- A judge found former American International Group ( AIG) CEO Maurice "Hank'' Greenberg and former CFO Howard Smith liable for damages on a fraudulent reinsurance transaction.

The ruling is a setback for Greenberg, who has been defending himself against the lawsuit since 2005. The lawsuit claims that a AIG entity, called Capco Reinsurance, was allegedly used to hide over $200 million losses from investors that were part of an auto warranty insurance program, according to Reuters. Eliot Spitzer originally filed the lawsuit and current state Attorney General Andrew Cuomo continued to pursue the case.

Greenberg's lawyer told Reuters they he plans to appeal the ruling.

Attorneys for Greenberg confirmed that Greenberg would appeal the ruling and issued a statement Monday evening stating that he has, "always rigorously denied participation in or knowledge of any wrongdoing connected to a reinsurance transaction between AIG and Gen Re some 10 years ago."

The statement adds that the Capco Transaction, "has been deemed impermissible by Justice Ramons on an entirely novel theory," and that "Greenberg was specifically advised that the form of the transaction would meet the requirements of all legal, regulatory and tax laws....The opinion of Justice Ramos rejects this fundamental principle of corporate governance. Mr. Greenberg is confident that his appeal will reestablish the standards governing corporate executive reliance and responsibility and the appropriateness of his conduct"

--Written by Maria Woehr in New York.

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