A news release from Empire State attorney General Eliot Spitzer said the eight ex-executives were accused of colluding with executives at leading insurance companies to arrange noncompetitive bids and then conveying these bids to Marsh clients under false pretenses.
According to Spitzer, 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. The indictment charged that the 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, Spitzer alleged, 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. The victim companies ranged from high technology firms to a fruit cannery to a cosmetics manufacturer.
Agreements have not yet been reached with ACE, AIG, Zurich or Liberty.
The indictment charges the following individuals with Scheme to defraud in the First Degree, Combination in Restraint of Trade and Competition, and Grand Larceny in the First, Second and Third Degrees.
- William Gilman, executive marketing director and managing director
- Joseph Peiser, head of Global Broking Excess Casualty and managing director
- Edward McNenney, Global Placement Director and managing director
- Greg Doherty, ACE Local Broking Coordinator Team Leader and senior vice president
- Thomas Green, Jr., Senior Vice President.
The indictment charges the following individuals with Scheme to Defraud in the First Degree; Combination in Restraint of Trade and Competition; and Grand Larceny in the Second Degree:
- Kathleen Drake, local broking coordinator team leader and managing director
- William McBurnie, coverage and carrier specialist and senior vice president
- Edward Keane, Jr., assistant vice president.
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 (See Spitzer Insurance Bid-Rigging Probe Prompts Three More Guilty Pleas )