New York State Attorney General Eliot Spitzer announced in a Thursday news release that Senior Vice President Robert Stearns pleaded guilty before Justice James Yates in New York County Supreme Court to a charge of a Scheme to Defraud in the First Degree, which carries a maximum sentence of 1 1/3 to 4 years in state prison.
Spitzer’s announcement said that Stearns admitted that during a period from 2002 to 2004, he instructed insurance companies to submit noncompetitive bids for insurance business, and gave these bids to Marsh clients under false and fraudulent pretenses. According to Spitzer’s office, the bids allowed Marsh to control the market, to protect incumbent insurance carriers when their business was up for renewal and to maximize Marsh’s profits.
Six executives at four companies in the insurance industry have now pleaded guilty to criminal charges in the probe (See Spitzer Takes On Contingent Commissions ), Spitzer said. Two executives at AIG, two from Zurich American Insurance Company, and one from ACE previously entered pleas to similar charges. The Marsh executive is expected to testify in future cases, as are the five other insurance company employees who previously entered criminal pleas, Spitzer’s office said.
The criminal complaint against Stearns is here .