AIG Sues Former Accounting V.P., Alleging Extortion Attempt

American International Group Inc. sued a former accounting vice president last Friday, alleging she has refused to return company computers and confidential information and has attempted to “harass, extort and injure” the insurer.

The insurance company filed its breach-of-contract claim against Dong “Dee” Chung in federal court in Manhattan, saying she made allegations of accounting improprieties at the company after being terminated earlier this month for “performance deficiencies and rank insubordination.”

AIG said in its lawsuit that Chung, who worked for the insurer for less than a year, has a history of “harassing her former employers and lodging baseless allegations.”

“AIG committed to investigate her allegations — which, AIG determined, related to issues that had previously been surfaced and shared with appropriate regulators — but refused her demand for a settlement,” the lawsuit says.

Chung responded with “what has become an escalating campaign of harassment and intimidation” that included sending privileged and confidential company legal memoranda to competitors and litigation adversaries and a “daily barrage of emails from numerous changing email aliases to AIG directors, officers and employees,” according to the lawsuit.

The complaint alleges that Chung also has ignored AIG’s demand that she return a BlackBerry e-mail pager and two company laptops issued to her.

Chung, a U.S. citizen who is believed to be living in Hong Kong, couldn’t immediately be located for comment on Friday.

Last year, New York-based AIG announced it would restate more than four years of its earnings and said, without naming its former Chairman Maurice “Hank” Greenberg directly, that former executives at times were able to “circumvent internal controls over financial reporting.” Greenberg retired from AIG last year.

Earlier this year, AIG agreed to pay more than $1.6 billion to settle accounting fraud allegations by New York Attorney General Eliot Spitzer and the Securities and Exchange Commission. Spitzer, who was recently elected as New York’s governor, is pursuing a civil action against Greenberg.

“The complaint speaks for itself,” said Chris Winans, an AIG spokesman, on Friday.

Chung joined AIG’s New York office in January as a vice president and assistant director for accounting policy in its Comptroller Division and was assigned to be the company’s Hong Kong designate in its Office of Accounting Policy in June, according to the lawsuit.

AIG said Chung was “unwilling to cooperate with others at AIG or take direction” from her superiors after her hiring and received a verbal warning in July that her performance was deficient.

The lawsuit says Chung didn’t respond to a request for a meeting with her new supervisor in November and didn’t report to the office for an 11-day period in late November, even though her supervisor hadn’t approved her request for leave.

She also refused a request in early December to work from a new office in Hong Kong and ignored additional requests to meet with her new supervisor, according to the complaint. Chung was terminated on Dec. 6, according to the lawsuit.

“Defendant, in response, alleged that AIG had engaged in accounting irregularities,” the lawsuit says. “Defendant concluded her remarks by demanding to know what her ‘settlement’ would be. Defendant was informed that she would not receive any ‘settlement’ and that she should raise any concerns about purported improprieties through appropriate channels.”

In its complaint, AIG also said that Chung, who was acting as her own legal representative, harassed her former employee, KPMG LLP, in a prior lawsuit and was sanctioned by an appellate court in Chicago.

In an order in June 2004, the 7th Circuit Court of Appeals admonished and reprimanded Chung for “abuse of the court system through frivolous and vexatious litigation.”

“Any further such abuse will result in the imposition against her of a bar to further access to the federal courts, except in criminal cases and applications for writs of habeas corpus,” the appeals court found.