The tensions rose another notch yesterday in the 7-year-old fraud case against former American International Group Inc. (AIG) Chief Executive Officer Maurice Greenberg and Chief Financial Officer Howard Smith. Greenberg bit back at New York Attorney General Eric Schneiderman, claiming that the state should be barred from invoking a 91-year-old state law in the case.

Greenberg and Smith requested permission to appeal the fraud case over a pair of dubious reinsurance transactions to the New York Court of Appeals—the state's highest court—after a Manhattan appeals court last week decided that Schneiderman's case could go to trial.

The attorney general is pursuing civil fraud claims against the former AIG executives under the state's Martin Act, which gives Schneiderman power to fight financial fraud. The act, unlike federal law, does not require investigators to prove intent in order to prevail on a securities fraud claim.