AIG, Marsh Executives Plead Guilty
Three Plead to Criminal Charges in Eliot Spitzer's
Insurance Industry Fraud Investigation.
NEW YORK - A former senior executive at Marsh & McLennan Cos. Inc. and two executives from American International Group Inc. pleaded guilty to fraud charges stemming from New York Attorney General Eliot Spitzer's sweeping investigation of fraud in the insurance industry.
The pleas were entered Tuesday afternoon in Manhattan criminal court before Justice James Yates. AG Spitzer's office said it has obtained nine guilty pleas from executives at AIG, Marsh, ACE Ltd. and Zurich Financial Services since launching its industry probe last year.
AIG is the world's largest insurer by market value, and Marsh is the world's largest insurance broker. Both are based in New York.
The highest-ranking executive pleading on Tuesday was Joshua Bewlay, who had been a Marsh senior vice president and managing director in its excess casualty group.
Bewlay pleaded guilty to one felony count of scheming to defraud. As part of his plea, Bewlay "described an official protocol whereby Marsh clients were given a significantly understated figure when asked about the amount of revenue Marsh derived from placement service agreements," Spitzer's office said.
John Mohs, a former manager at AIG's American Home Assurance Co. unit, pleaded guilty to the same charge. The third executive, AIG underwriter Carlos Coello, pleaded guilty to scheming to defraud in the second degree, a misdemeanor.
Mohs had reported to former AIG executives Karen Radke and Jean-Baptist Tateossian, who last October were the first to plead guilty to fraud charges in the probe.
Bewlay and Mohs each face up to four years in prison, and Coello up to one year. All three are cooperating with the investigation, Spitzer's office said.
Marsh spokeswoman Barbara Perlmutter said Bewlay was no longer with the company and declined further comment.
Last month, Marsh agreed to pay $850 million in restitution to settle charges that it rigged bids and fixed prices in insurance markets.
In a statement, AIG said Mohs' and Coello's pleas involve the same unit and broker relationship as, and similar conduct to, the earlier guilty pleas by AIG executives. AIG said it "deeply regrets" its employees' involvement and said it will continue to cooperate with Spitzer.
Spitzer and the U.S. Securities and Exchange Commission in the last week subpoenaed AIG regarding products that might help companies smooth earnings.
In his landmark Oct. 14 lawsuit, Spitzer accused Marsh of exploiting its dominant position to steer business to selected insurers, while raking in "placement fees." Marsh collected more than a billion dollars in such fees in recent years before suspending the practice last fall.
As part of that complaint, Spitzer's office said Bewlay had sent Marsh executive Robert Stearns an e-mail on March 5, 2003, instructing him to secure so-called "B quotes" from insurers. B quotes are bids set too high to win but giving the appearance of competition.
Last month, Stearns became the first Marsh executive to plead guilty to criminal charges filed by Spitzer.
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