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N.Y. AG Spitzer Indicts Former Marsh Execs for Roles in Bid Rigging, Fraud

Posted on 15 Sep 2005

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New York Attorney General Eliot Spitzer and Insurance Superintendent Howard Mills on Thursday announced the indictment of eight former executives of insurance brokerage giant Marsh Inc. for their roles in a bid rigging scheme that officials maintain defrauded clients of millions of dollars.  
The former executives are accused of colluding with executives at leading insurance companies to arrange noncompetitive bids and conveying these bids to Marsh clients under false pretenses.  
The indictments come after 17 individuals at five companies, including eight former Marsh employees, previously pleaded guilty to criminal charges in the ongoing insurance industry investigation that began a year ago. 
"These indictments are part of a continuing effort to hold individuals accountable for bid rigging and other illegal activities that defrauded insurance clients," Spitzer said. 
Mills said that his department would "continue to investigate with the Attorney General's office allegations of illegal behavior that prevent consumers from getting the best insurance products at the best price."  
The indictment charges that from November 1998 to September 2004, the defendants colluded with executives at American International Group, Zurich American Insurance Company, ACE USA, Liberty International Insurance Company and other companies to rig the market for excess casualty insurance. 
According to the indictment, defendants and other Marsh employees told their excess casualty clients that they obtained bids for their business from insurance companies in an open and competitive bidding process. In fact, the indictment maintains, defendants had rigged the process in the following ways: First, before any bids were submitted, the defendants determined which insurance company would win the business. Second, they set a "target" for the winner to submit as its bid. Third, they obtained losing bids, which they called "B quotes," from other participating insurance companies.  
By misleading customers into believing that the customers' interests came first, the conspirators fraudulently obtained millions of dollars in commissions and fees for Marsh and millions of dollars in premiums for the insurance companies, according to Spitzer's charges. The victim companies ranged from high technology firms to a fruit cannery to a cosmetics manufacturer.  
The indictment charges the following individuals with Scheme to Defraud in the First Degree, an E Felony; Combination in Restraint of Trade and Competition, an E felony; and various counts of Grand Larceny in the First, Second and Third Degrees, respectively B, C and D felonies: 
* William Gilman, executive marketing director and managing director; 
* Joseph Peiser, head of Global Broking Excess Casualty and managing director; 
* Edward J. McNenney, Global Placement director and managing director; 
* Thomas T. Green, Jr., senior vice president; and  
* Greg J. Doherty, Marsh's ACE Local Broking coordinator team leader and senior vice president. (Editor's Note: In previous reports, Doherty was erroneously identified as an employee of ACE USA.) 
The indictment charges the following individuals with Scheme to Defraud in the First Degree; Combination in Restraint of Trade and Competition; and various counts of Grand Larceny in the Second Degree:  
* Kathleen M. Drake, Local Broking coordinator team leader and managing director;  
* William L. McBurnie, Coverage and Carrier specialist and senior vice president;  
* Edward J. Keane, Jr., assistant vice president. 
The defendants are to be arraigned Thursday before the Hon. James A. Yates in New York County Supreme Court. 
If convicted of the top count with wh