Podcast Center
Video Center
Webcasts
Resource Center
Events
August 24, 2005 at 08:00 PM
The AG says this is not the end; others to follow
After close to a year of civil litigation and plea bargain deals, New York Attorney General Eliot Spitzer announced the indictment of 8 insurance brokers on charges of bid-rigging and defrauding clients.
The 37-count indictment unveiled Sept. 15 in New York County Supreme Court before Judge James A. Yates, charges the 8 former executives from the insurance brokerage firm Marsh, a subsidiary of Marsh & McLennan Companies based in New York, with scheming to defraud, restraint of trade and competition, and grand larceny.
Under the felony charges of grand larceny, the executives could face a maximum of 15 to 25 years in prison.
Those charged in the indictment are: 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; Greg J. Doherty, ACE local broking coordinator team leader and senior vice president; Thomas T. Green Jr., senior vice president; Kathleen M. Drake, local broking coordinator team leader and managing director; William L. McBurnie, coverage and carrier specialist and senior vice president; and Edward J. Keane Jr., assistant vice president.
Gilman was released on $100,000 bail. Peiser and McNenney were released on $75,000 bail; Doherty was released on $50,000 bail; Green, Drake and McBurnie were released on $35,000 bail. Keane was released on his own recognizance.
According to an MMC spokesman, the 8 executives have left within the last 11 months.
“These former Marsh managers are accused of colluding with leading insurance companies to arrange non-compete bids and conveying these bids to Marsh clients under false pretences,” said Spitzer during a press conference announcing the indictments.
The indictments are part of his ongoing investigation of the insurance industry that began over a year ago that resulted in a suit against MMC that would eventually see the ouster of its chief executive, agreements to abolish contingent commissions by not only MMC, but Aon, Willis, and Arthur J. Gallagher as well, and settlement payments of over $1 billion to clients.
The indictment alleges that the 8, from November 1998 to September 2004, “colluded with executives at American International Group, Zurich American Insurance, ACE USA, Liberty International Insurance Company, and others to rig the market for excess casualty insurance,” Spitzer’s office said.
According to the indictment, the alleged scheme involved working with the insurers by determining who would win business, setting a target premium for the predetermined winner and obtaining losing bids to make the process look genuine.
The scheme, Spitzer said, earned millions of dollars for both the carriers and Marsh.
“Not only was this wrong, but it was harmful to the economy,” declared Spitzer. “It skewed the system and added to the already high cost of insurance. It subverted the fundamental principle of our economy, which is full, free and fair competition.
