New York Drops Last Insurance Fraud Charges Against Marsh Execs

Finally ending a nearly six-year ordeal for the defendants, New York’s attorney general has dropped all remaining charges against eight insurance executives from Marsh & McLennan Companies. The eight executives were among 29 insurance executives allegedly involved in a massive 2004 insurance fraud scandal which led to state-court antitrust charges related to alleged bid rigging by the insurance brokerage.

The bid-rigging scandal began in 2004, when then-Attorney General Eliot Spitzer initiated an investigation into allegations that Marsh was steering corporate insurance buyers to favored insurers in exchange for financial kickbacks. Marsh was the largest insurance broker in the U.S. at that time.

Insurance Fraud Prosecution Ended in Acquittals, Vacated Convictions, Dismissals for 8

In January 2005, the company settled a civil case brought by Spitzer, agreeing to pay an $850 million fine and take steps to prevent or stop any bid rigging, a form of insurance fraud.

Twenty-nine executives from Marsh and a number of insurance carriers were indicted in September 2005 in relation to the alleged bid-rigging conspiracy. 21 of those pled guilty and agreed to cooperate with the investigation. Eight, including former Marsh executives William Gilman and Edward McNenney, refused to plead guilty.

Gilman and McNenney were convicted of felony antitrust after a 10-month bench trial in February 2008. However, the trial court judge vacated their convictions in July 2010 after new evidence was discovered.

Five other executives from Marsh and one from Zurich Financial Services AG were acquitted or have had their cases dismissed.

After Gilman and McNenney’s convictions were vacated, it became clear that New York was not going to be able to obtain convictions against any of the executives who refused to plead guilty. The New York Attorney General’s Office, now led by Eric Schneiderman, announced today that it has dismissed all remaining charges against Gilman and McNenney. Schneiderman had no immediate comment on the cases.

Source: Westlaw News & Insight, “NY drops last Marsh bid-rigging criminal cases,” Jonathan Stempel and Jeff Roberts, January 14, 2011