Libel Case Puts Spitzer on the Spot Over Bullying

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If Eliot Spitzer wins the race for city comptroller, his first job may be defending himself in court. Last month a libel suit was quietly filed against him in a state court in Carmel by Maurice “Hank” Greenberg, the biggest of the tycoons Spitzer targeted as state attorney general.

The case doesn’t involve a lot of money, at least at this stage — the lawsuit simply says damages exceed $25,000. But the issue it raises is crucial: Will the courts countenance Spitzer’s penchant for taking to TV and the press to declare his targets guilty of wrongdoing, even before they’ve been convicted of anything? In other words, does the bully pulpit mean he can be a bully, even long after he’s left office?

Greenberg was the chairman of the huge insurance combine AIG when Spitzer launched his attack, which eventually forced Greenberg to leave AIG. The new management took enormous financial risks and imploded during the 2008 crisis, and the company had to be bailed out by the Federal Reserve (raising issues at the center of separate litigation also launched by Greenberg).

The tycoon’s libel suit centers on statements Spitzer made after he resigned the governorship. One was in May 2012, as Spitzer reacted to a state Supreme Court ruling that his private e-mail account would be subject to New York’s freedom of information law because Spitzer had used it for public business.

The ex-governor told The New York Law Journal that the decision was part of an effort by Greenberg and a colleague to “clear their names” for their involvement with the “corrupt company” AIG. He said they couldn’t “escape the simple reality that they were running a crooked company.”

He went on to say that Greenberg had been “thrown out by his own board and his accounting was fraudulent.” It was classic Spitzer, in that neither he nor any other law-enforcement agency has managed to convict Greenberg of any fraud — a point that was pressed by Maria Bartiromo in an interview that is also at the center of the libel suit against Spitzer.

In that July 13, 2012, interview, he told her that Greenberg was one in a “litany of corporate executives who defrauded the market.”

When Bartiromo pointed out that some people blame AIG’s failure on the fact that management Spitzer himself picked to run AIG had “permitted the company to take on unacceptable risk,” Spitzer again asserted that “Hank Greenberg’s accounting was fraudulent.”

This began an astonishing exchange in which the newswoman tried repeatedly to warn Spitzer that, as she put it at one point, “You just can’t throw around the word ‘fraud.’”

As Greenberg’s complaint reports, Bartiromo warned Spitzer: “You keep saying fraud, but there’s no charge of fraud.” She cautioned him against acting “like judge, jury and the executioner.” The court, she noted, “did not say Hank Greenberg committed fraud. You said it, you continue to say it, and you say it all the time.”

What a reversal: Usually, it’s the reporter trying to goad the public official into saying something newsworthy. Here, it’s the reporter trying to steer the public figure into behaving responsibly.

Spitzer’s apparently not up to that. There just seems to be some demon urging him on.

This doesn’t mean he’ll lose the libel action. It’s extremely difficult for a public figure, like Greenberg, to win a libel suit. But it will be a case to watch in the coming months.

New Yorkers, after all, are weighing whether to give Spitzer a second chance and a third bully pulpit. His successor as attorney general, Eric Schneiderman, may win on two outstanding civil counts against Greenberg. But they are a small remainder of what Spitzer ballyhooed. The real question is whether New Yorkers will be in for a new term of bullying from a public pulpit.

This column originally appeared in the New York Post.

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