Posted on 27 Oct 2009
Three former executives of insurance broker Marsh Inc. were found not guilty on Monday of bid-rigging, price-fixing and other misconduct following an 11-month trial in Manhattan.
Joseph Peiser, a former top executive of the firm who was head of excess casualty, as well as two subordinates, Greg Doherty and Kathleen Drake, were indicted in 2005 following an investigation by then-New York Attorney General Eliot Spitzer. They were subjects of a larger investigation into the practices at Marsh that led to a total of eight individuals being indicted. About 20 other individuals at various insurance firms pleaded guilty to antitrust related charges.
Some former Marsh executives chose to go to trial. In February, William Gilman and Edward J. McNenney were found guilty of an antitrust charge but were acquitted of numerous other charges. Two other executives are still awaiting trial.
On Monday, three of the eight Marsh defendants claimed vindication, as they were acquitted by New York State Supreme Court Judge James Yates after a bench trial. Messrs. Peiser and Doherty and Ms. Drake were accused of colluding from 1998 to 2004 with executives at American International Group Inc., Zurich American Insurance Co., a unit of Zurich Financial Services AG, among others.
Mr. Peiser is "thrilled to have been vindicated and to finally be able to get on with his life," said his lawyer, Jerry Bernstein. Mr. Bernstein said the defense proved that the witnesses, many of whom had pleaded guilty and cooperated in the government's case, "were fabricating and exaggerating what had actually occurred." The defendants also were acquitted of scheming to defraud Marsh Inc.'s clients, which include Intel Corp., among others.
The indictments came after Marsh & McLennan Cos., which owns Marsh Inc., agreed to pay $850 million as part of a settlement of a civil lawsuit brought by Mr. Spitzer, accusing the company of bid-rigging and improperly steering clients to insurers who paid large commissions to the insurance broker. Marsh & McLennan didn't admit or deny wrongdoing in agreeing to the settlement.
The office of current attorney general Andrew Cuomo, which took over the case after Mr. Spitzer became governor in 2007, didn't immediately respond to a request for comment.
The 11-month trial featured more than 1,500 exhibits, 21 witnesses, and generated 16,000 pages of court transcripts, said Mr. Bernstein.