AIG, Marsh Execs Plead Guilty in Spitzer Probe, Bringing Total Pleas to 9; AIG Offers Response

February 15, 2005

New York Attorney General Eliot Spitzer said Tuesday that a senior executive at Marsh and two AIG employees have pleaded guilty to criminal charges in connection with an ongoing investigation of fraud and bid rigging in the insurance industry.

All three defendants admitted to participating in a scheme that allowed Marsh, the nation’s largest insurance broker, to protect incumbent insurance carriers when their business was up for renewal.

Press reports identified the defendants as Josh Bewlay, a Marsh senior vice president in the excess casualty group; John Mohs, a manager at AIG’s American Home Assurance Co.; and Carlos Coello, an underwiter for AIG.

With today’s action, Spitzer’s office has now obtained nine guilty pleas from executives at four different companies.

As part of his plea today, Bewlay, the managing director of Marsh’s excess casualty unit, described an official protocol whereby Marsh clients were given a significantly understated figure when they asked about the amount of revenue Marsh derived from placement service agreements, according to Spitzer’s announcement.

Bewlay and Mohs reportedly pleaded guilty to the crime of scheme to defraud in the first degree, a felony which carries a maximum sentence of four years in state prison. The third defendant, Coello, was reported to have pleaded guilty to the crime of scheme to defraud in the second degree, a misdemeanor carrying a maximum sentence of one year in jail.

All three defendants pleaded guilty before Justice James Yates of New York County Supreme Court.

The defendants in today’s cases are expected to testify in future cases, as are the six other insurance industry employees who entered criminal pleas. Previously, two executives at AIG, two from Zurich American, one from Marsh and one from ACE pled guilty to criminal charges.

Spitzer thanked the New York State Insurance Department for its cooperation in the joint investigation, which is continuing.

AIG on Tuesday issued the following statement in response to the announced actions:

“The two plea agreements by AIG employees announced today involve the same broker relationship, similar conduct, and the same division of the same AIG subsidiary as the plea agreements entered into by two other AIG employees last October. The two new pleas are by employees who worked under the two individuals who previously entered into plea agreements.

“All of the AIG employees who have entered into plea agreements worked for the Excess Casualty Division of American Home Assurance Company, an AIG subsidiary that provides high-limit excess liability coverage to businesses. These employees have pled guilty to charges that they participated in improper bidding and quotation practices with Marsh & McLennan.

“The plea agreements announced today reflect information provided by AIG as part of its ongoing cooperation with the New York Attorney General’s investigation.

“AIG takes this matter very seriously and deeply regrets that some of its employees were involved. AIG will continue to cooperate with the Attorney General’s investigation and with other investigations.”

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