AIG files suit against Bank of America, looking to recover $10 billion in losses

AIG Building in ManhattanAmerican International Group (AIG), the U.S. largest insurer that has been steeped in controversy, has filed a lawsuit against Bank of American Corp. The insurer is looking to recover over $10 billion in losses from what it is calling “massive fraud.” The lawsuit is spurred by allegations of mortgage fraud stemming from the bank’s deals leading up to the 2008 economic recession. The suit claims that Bank of America misrepresented its mortgages as being of a higher quality than they actually were.

According to the suit, filed with the New York State Supreme Court in Manhattan, “Defendants were engaged in a massive scheme to manipulate and deceive investors.” Such allegations cast further doubt on the ailing bank as it is faced with several litigations regarding its dubious activities in 2008. Whether AIG will be able to recover their money, however, is yet to be seen.

Bank of America spokesman Lawrence Di Rita rejects these allegations. In speaking with Reuters, Di Rita claims that the insurer pursued mortgages that were not financially sound despite warnings from the bank. The bank rejects any notion that it tried to capitalize on AIG’s willingness to compete in the housing market by presenting fraudulent information.

The case, American International Group Inc vs. Bank of America Corp. et al, will be held at the New York State Supreme Court. A date has not yet been set as negotiations between the companies continue.

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