A former attorney for American International Group (AIG) and a current Softbank compliance executive has alleged in a federal whistleblower lawsuit that AIG fired him after he complained about fraudulent activity related to an attempt to spin off a separate legal services company.

Aaron Katzel, an attorney who worked at AIG for 10 years and was the head of the company’s Legal Operations Center (LOC), filed the complaint last week (Sept. 3) in U.S. District Court, Southern District of New York (SDNY). In the lawsuit, Katzel says he was fired in 2017 after alerting AIG’s compliance department of “corporate fraud, malfeasance, and numerous internal control weaknesses.”

In March of this year, Katzel was hired by Softbank to be its chief operating officer, legal and compliance, according to his profile on LinkedIn.

The wrongdoing at AIG, he said, occurred during an attempt to spin off the LOC into “an externally facing, independent business supported by outside investors that would provide services to, and generate equity value for, AIG.”

AIG would eventually decide not to move forward with spinning off the LOC into a separate company, terminating the plan in the fourth quarter of 2016.

In January 2017, Katzel said he “raised his concerns to AIG’s compliance team in response to an annual anti-fraud questionnaire circulated as part of AIG’s SOX (Sarbanes-Oxley Act) processes.”

Katzel said the fraud involved AIG executives sharing confidential corporate information with a competitor during a bidding process. Those same executives misled AIG management by undervaluing the spinoff’s potential value, he claimed, which caused the “intentional destruction of an opportunity for AIG and its shareholders to generate significant equity value at a time when AIG was operating at a loss.” Company executives also destroyed documents and failed to manage conflicts of interest, he said.

AIG responded by launching an internal investigation into his claims, he said, after which the company’s chief compliance officer concluded Katzel had “valid concerns,” according to the lawsuit. But in May 2017, the company fired him.

After he was fired, Katzel filed a complaint alleging SOX violations at AIG related to the LOC spinoff plan with the U.S. Occupational Safety & Health Administration. The Department of Labor dismissed that complaint in November 2018.

An AIG spokeswoman said the SDNY lawsuit represents Katzel’s third attempt to sue the company.

“After an OSHA investigator reviewed and summarily dismissed his claims over a year ago, Mr. Katzel brought them before an Administrative Law Judge, only to abandon his case on the eve of trial,” she said in an emailed statement. “Now he seeks to bring his baseless claims before a federal court. We look forward to demonstrating, yet again, that Mr. Katzel’s claims have no merit.”

In the lawsuit, Katzel has demanded nearly $10 million in back pay, interest, lost equity in AIG stock, as well as emotional and reputational damage. Katzel said in the lawsuit that he was forced to move from New York to California as a result of AIG’s treatment of him, which included “having its employees inform people within Mr. Katzel’s professional network that Plaintiff was engaged in a frivolous dispute with AIG.”