Eight former executives at Marsh & McLennan Companies Inc. were charged with felonies in indictments unsealed Thursday in New York Attorney General Eliot Spitzer's investigation of bid rigging and price fixing in the insurance industry.
The former executives were accused of colluding with brokers and executives at major insurance companies to arrange noncompetitive bids for corporate customers of Marsh & McLennan, the nation's largest brokerage, based in New York.
The indictment said the former executives allegedly set a ''target'' figure for the predetermined winner to bid after obtaining losing ''B quotes'' from other participating companies to mislead customers.
''These are very senior executives within the Marsh hierarchy,'' Spitzer said. ''Not only was it wrong, it was harmful to the economy ... There is simply no responsible argument in favor of rigging bids, stifling competition and cheating.''
The indictments allege bid rigging from November 1998 to September 2004. Spitzer accused the defendants of colluding with executives at American International Group, Zurich American Insurance Co., ACE USA, Liberty International Insurance Co. and other unnamed companies.
Agreements have not been reached with AIG, Zurich, ACE or Liberty, Spitzer said.
Previously, 17 executives in five companies -- including eight former Marsh & McLennan employees -- pleaded guilty to criminal charges in the insurance investigation. Spitzer said the investigation continues into the action of other Marsh employees. He is also negotiating with other insurance companies, including American International Group, to eliminate anticompetitive practices.
The defendants in the indictment unsealed Thursday pleaded not guilty in arraignments.
Five former executives were indicted on charges of first-degree scheming to defraud, restraint of trade and competition, and grand larceny -- all felonies. They were William Gilman, was executive marketing director; Joseph Peiser, head of global broking excess casualty and managing director; Edward J. McNenney, global placement director and managing director; Thomas T. Green Jr., a senior vice president, and Greg J. Doherty, former local broking coordinator and team leader and a senior vice president.
Three others were indicted on charges of scheming to defraud, restraint of trade and grand larceny: Kathleen M. Drake, who was local broking coordinator team leader and managing director; William L. McBurnie, coverage and carrier specialist and senior vice president, and Edward J. Keane Jr., assistant vice president.
If convicted, Gilman, Peiser, McNenney, Green and Doherty face a maximum sentence of 25 years in state prison. The other defendants face a maximum of 15 years in prison.
Peiser's attorney, Jerry Bernstein of New York, said his client will fight the charges at trial.
''Joe Peiser was a loyal Marsh employee and did not do anything wrong,'' Bernstein said. ''He did not steal any money or engage in a scheme to defraud or violate any of the statutes.''
Robert Cleary, the attorney for Gilman, said Gilman ''dedicated his career to the benefit of his clients and Marsh.'' He added: ''We look forward to proving his innocence at trial.''
Other attorneys didn't respond to requests for comment or could not immediately be reached.
Spitzer has closed most of his earlier cases with settlements and guilty pleas, rather than at trial.
In January, Marsh & McLennan agreed to pay $850 million in restitution to end Spitzer's investigation into bid rigging and price fixing. The settlement became a model for other insurance company settlements.
Marsh & McLennan as a corporation faces no criminal sanctions, Spitzer has said.
In a statement about Thursday's action, Michael G. Cherkasky, president and chief executive officer of Marsh & McLennan, said ''this indictment is about the past.'' He added that Marsh & McLennan ''today is focused on the future and is committed to excellence and the highest standards of professionalism and service.''
Marsh & McLennan shares rose 2 cents to close at $28.90 Thursday on the New York Stock Exchange.