Bid-Rigging Case Against Ex-Marsh Execs Dropped

By Allison Grande

Law360, New York (November 19, 2009) -- A New York state Supreme Court judge has dismissed criminal indictments against two former Marsh Inc. executives and a former Zurich American Insurance Co. executive accused of participating in a massive bid-rigging and price-fixing scheme.

At a hearing Thursday, Judge James A. Yates dropped the charges against the remaining three defendants — former Marsh Senior Vice Presidents Thomas T. Green, Jr. and William L. McBurnie, along with former Zurich Vice President Geri Mandell — less than a month after the judge acquitted three additional ex-Marsh executives of the same charges.

Thursday's dismissal came at the request of New York Attorney General Andrew Cuomo, who cited the potential high expense of pursuing another lengthy trial in light of the “likely outcomes,” according to court documents.

On Oct. 26, Judge Yates found Marsh former managing director Joseph Peiser and his subordinates Greg Doherty and Kathleen Drake not guilty of colluding with executives at other insurance companies from 1998 to 2004. The decision followed an 11-month bench trial that generated more than 16,000 pages of transcripts and 1,500 exhibits, an attorney for Peiser said at the time.

Representatives for Cuomo and the three defendants dismissed from the suit did not immediately respond to requests for comment on Thursday.

The massive case started with the 2005 indictments of at least eight people by then-New York Attorney General Eliot Spitzer. The investigation spread, and about 20 other people at different insurance firms pled guilty to related antitrust charges.

In February 2008 Judge Yates found former Marsh executives William Gilman and Edward McNenney guilty of one count of violating the Donnelly Act — New York state's antitrust law — but he acquitted them of a bevy of larceny charges and one count alleging a scheme to defraud.

Gilman and McNenney were among the eight former Marsh managers originally targeted by Spitzer in a 37-count indictment. Prosecutors had accused the defendants of being part of a bid-rigging scheme that defrauded Marsh's clients out of millions of dollars, and alleged that they colluded with insurance company executives to set up noncompetitive bids and conveyed those bids to clients under false pretenses.

The executives allegedly involved in the collusion were with companies including Zurich, American International Group Inc., ACE USA and Liberty International Insurance Co., according to the New York Attorney General's Office.

Marsh has distanced itself from the matter, saying that the guilty verdict was “about the past” and noting that the trial was not against the company, but two former employees.

“Today, Marsh and its new leadership are focused on the future,” Marsh said at the time of Gilman and McNenney's convictions.

Marsh settled a civil lawsuit with New York's attorney general in January 2005, agreeing to adopt reforms and set up an $850 million restitution fund for policyholders.

The cases involved in Thursday's dismissals are New York v. Doherty, case number 04800-2005, and New York v. Mandel, case number 06640-2006, in the Supreme Court of the State of New York.

--Additional reporting by Hilary Russ and Ben James