Cuomo Has a New Toy: Fraudulent Conveyance Claims

The State Attorney General of New York, Andrew Cuomo, is using the state's fraudulent conveyance statute to threaten AIG into reclaiming paid compensation to AIG executives.  The claim is that the compensation was not for "fair value" and was constructive fraud on AIG creditors.  The claim is a stretch.  Fair value of executive time, itself a highly debatable claim, is one of three elements. An analysis will be based on custom and practice in the industry -- not absolute, personal assessments of worth.   Second the contested salary payments must have been agreed to (when the contracts were signed not when payments were actually made) when AIG was actually insolvent or that the contracts led to the insolvency of AIG.  The amounts could not lead to insolvency; they are not large enough. So the claim must be that AIG was insolvent when it agreed to pay the contested salaries.  This is a technical claim based on AIG financial and cannot be based solely on the government bailout. The third element is that the amounts were large enough to be a fraud on the creditors -- small trifling amounts, even it they should not have been paid, are not large enough to hurt creditors.