In 2004, New York Attorney General Eliot Spitzer launched an investigation of bid rigging in the insurance industry in response to claims that executives had steered clients to favored insurers in return for kickbacks.
In January 2005, Marsh & McLennan Companies entered into an $850 million settlement of a civil complaint brought by Spitzer and ultimately, 21 Marsh executives and insurance carrier executives pled guilty to fraud and other charges.
In September 2005, William Gilman, Edward McNenney and six other Marsh executives were indicted by a state grand jury on charges of fraud and grand larceny. Gilman and McNenney went on trial in New York State Supreme Court before Justice James A. Yates, who heard the case without a jury.
The prosecution contended that Gilman, an executive marketing director, and McNenney, a global placement director, fraudulently obtained millions of dollars for Marsh and other insurance companies by rigging the market for excess casualty insurance.
Prior to trial, more than 20 million pages of files, records and emails were turned over to the defense. The prosecution’s evidence came from the testimony of 12 Marsh brokers and underwriters from several other insurance companies who had pled guilty to participating in the scheme.
The trial began on April 10, 2007 and ended on February 21, 2008 when Gilman and McNenney were acquitted of 20 counts and convicted of one count of fraud. They both were sentenced to 90 days in jail, to be served on weekends.
In July 2010, Justice Yates set aside the convictions after defense lawyers showed that the prosecution had failed to turn over 700,000 pages of documents. The documents included evidence that Gilman and McNenney had not engaged in a bid-rigging scheme as well as evidence that several of the prosecution’s witnesses had given contradictory testimony in other legal proceedings and received hidden promises of leniency for cooperation beyond what was contained in their plea agreements.
The defense discovered the existence of the documents in a separate 2009 trial of other Marsh defendants. Justice Yates said the documents would have been “invaluable” to the defense. The defendants in the 2009 trial were acquitted.
In January 2011, New York Attorney General Eric Schneiderman dismissed the charges against Gilman and McNenney. Yates also granted prosecution requests to dismiss the misdemeanor convictions of four other Marsh employees who had pled guilty and to reduce (and ultimately dismiss) the felony convictions of eight other Marsh employees who had pled guilty to misdemeanor convictions.
Gilman and McNenney later sued Spitzer for libel, but their suits were unsuccessful.
– Maurice Possley