Overturned Convictions in Marsh’s Bid-Rigging Case Leaves Zero Wins for Prosecutors

A New York judge has overturned the convictions of two former managing directors of Marsh Inc. in that state's wide-reaching bid-rigging case.

New York State Supreme Court Justice James A. Yates determined that prosecutors with the New York Attorney General's office had withheld evidence when trying the cases of William Gilman and Edward J. McNenney, who were each convicted on a charge of restraint of trade, though they were acquitted of a long list of other charges, according to an attorney of one of the defendants. Gilman had been the company's executive marketing director and managing director, and McNenney was global placement director and managing director.

Robert J. Cleary, a partner with Proskauer Rose LLP in New York, confirmed that his client, Gilman, no longer faces what had been a 16-weekend sentence that had been on hold to await the outcome of an appeal, which is now moot. "Hardly surprising, but great news," Cleary said of the development that emerged from Yates' review of the situation. "We found out after the trial that there was a whole bunch of evidence ... that they suppressed and did not turn over to us." Cleary said Yates agreed the missing evidence would have aided the defendants considerably. "It probably would have resulted in a not-guilty verdict," he said.

A 37-count indictment was initially filed against seven defendants in 2004 on behalf of former New York Attorney General Eliot Spitzer and former state insurance Superintendent Howard Mills. The case alleged the former executives colluded with executives at leading insurance companies to arrange noncompetitive bids that were conveyed to clients under false pretenses. Another executive, from Zurich American Insurance Co., was subsequently charged in 2006 (BestWire, Nov. 24, 2009).

Before this latest reversal of Gilman and McNenney's convictions, Yates had dismissed charges against Geri Mandel, a former Zurich vice president, and Thomas T. Green Jr. and William L. McBurnie, who are both former Marsh executives. The same judge found Joseph Peiser, former head of Marsh's global excess casualty unit, and Greg J. Doherty and Kathleen M. Drake, two local brokerage executives, not guilty last year.

At this point, there are no further charges pending in what had been a major and highly publicized case. While the criminal case has apparently foundered, a 2004 civil lawsuit that Spitzer filed against Marsh and its corporate parent, Marsh & McLennan Cos. (NYSE: MMC) was settled in January 2005, when Marsh agreed to establish an $850 million restitution fund. The settlement included an apology from Marsh but no admission of legal wrongdoing (BestWire, Jan. 31, 2005).

Attempts to reach the state prosecutors for comment were not immediately successful.

Marsh & McLennan Cos. is the largest global insurance broker, as ranked by Best's Review magazine. During afternoon trading on July 7, the company's shares were selling at $22.63, up about 2.12% from the previous close.

(Jesse A. Hamilton, Washington bureau manager: [email protected])