NEW YORK—Two former Marsh Inc. executives whose bid-rigging convictions were overturned have accused their former employer of setting them up as “scapegoats” by colluding with former New York Attorney General Eliot Spitzer to avoid criminal prosecution of Marsh.

Former Marsh Managing Directors William Gilman and Edward McNenney first sued Marsh Inc., Marsh & McLennan Cos. and two other Marsh units last October, accusing Marsh of violating federal law and breach of contract.

In an amended suit filed Friday in U.S. District Court for the Southern District of New York, the two accuse Marsh, MMC, Marsh Global Broking Inc. and former Marsh CEO Michael Cherkasky of colluding with Mr. Spitzer, who later became governor of New York, to avoid prosecution of Marsh.

The “New York attorney general sought to obtain some successful criminal prosecutions of individuals, even if the evidence did not justify such prosecutions,” the men allege in the amended complaint.

High-ranking targets

“Marsh agreed to provide the New York attorney general with assistance in achieving this objective and targeted Messrs. Gilman and McNenney as high-ranking employees for prosecution,” according to the complaint. The defendants “improperly sought to avoid criminal prosecution themselves and to create public scapegoats for the allegations of the New York attorney general.”

In their initial complaint, the two alleged, among other things, that Marsh did not pay them the severance or stock bonuses to which they were entitled, a violation of the federal Employee Retirement Income Security Act.

Both were indicted in 2005 on 37 counts regarding alleged bid-rigging. Before that, MMC settled New York state's civil suit regarding contingent commissions for $850 million.

Messrs. Gilman and McNenney were found guilty in February 2008 on a single count of restraint of trade and competition. But last July, New York County Supreme Court Judge James A. Yates overturned the convictions of both men, citing new evidence that “undermines the court's confidence in the verdict.”

The New York attorney general's office decided early this year to drop any further action against the two.

“The decision to prosecute William Gilman and Edward McNenney was made by the former New York attorney general and a grand jury, not by Marsh,” an MMC spokesman said in response to the amended complaint.