Spitzer goes after former Marsh execs

spitzernew2.jpgEven news relating to natural disasters cannot push the Lord of Regulation out of the public eye for long.
In a widely-anticipated move, Mr. Spitzer’s office indicted eight former Marsh Inc. insurance brokers and executives yesterday on criminal-fraud charges in connection with Mr. Spitzer’s long-running investigation of alleged bid-rigging in the insurance industry. Earlier posts on Mr. Spitzer’s forays against the Marsh employess are here and here.

The indictments allege essentially the same matters as the earlier civil lawsuit that Mr. Spitzer brought against Marsh — that the brokers cheated some corporate clients by rigging bids for excess casualty insurance contracts in a scheme to steer business to insurers that paid Marsh larger commissions than Marsh would have received from more competitive insurers. Mr. Spitzer alleges that the scheme increased at least 35 Marsh customers’ insurance costs by as much as $1 million in some instances. Earlier this year, Marsh & McLennan signed an $850 million settlement (ransom?) with Mr. Spitzer’s office under which the company apologized to its customers for its employees’ unlawful” and “shameful” behavior. Over the past several months, eight former Marsh employees have pled guilty to criminal charges in the matter.
For his part, Mr. Spitzer — who, as a part of the investigation into Marsh, arranged for the installation of his former employee and tennis buddy, Michael Cherkasky, as Marsh & McLellan’s CEO — stated that Marsh “should be applauded” for changing its management and business model to avoid conflicts of interest, but added that there may be even more prosecutions of former or current Marsh employees and others in the corrupt insurance industry.
Spitzer is a real piece of work.

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