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Ex-Marsh exec McBurnie sues broker over Spitzer case

McBurnie says firm made him scapegoat, damaging his career


TRENTON, N.J.—Another former Marsh Inc. executive has filed suit against the New York-based broker, alleging that Marsh set him up for malicious prosecution during former New York Attorney General Eliot Spitzer's investigation of alleged misconduct in the brokerage industry.

Former Marsh Senior Vp William L. McBurnie filed the suit in U.S. District Court for New Jersey in Trenton late last month.

Mr. McBurnie was indicted in 2005 on a variety of counts, including second-degree larceny in connection with the alleged bid-rigging. He denied any wrongdoing, and all charges against him were dismissed in 2009.

Among his allegations in the suit against Marsh Inc., parent company Marsh & McLennan Cos. Inc. and three other Marsh units, Mr. McBurnie alleges that Marsh set him up as a scapegoat and violated his constitutional rights against malicious prosecution, rendered him unemployable in the insurance industry, and failed to pay his legal costs in a timely manner. The suit seeks “in excess of $150,000.”

Marsh denied the allegations and promised to “vigorously defend” itself.

“The decision to prosecute William McBurnie was made by the former New York attorney general and a grand jury of the state of New York—not by Marsh,” said a spokeswoman for Marsh.

“The company met its obligations to Mr. McBurnie by paying him benefits under its severance pay plan and approximately $5.4 million in legal expenses for the costs of his defense in his criminal case,” the spokeswoman said. “These defense costs, which were paid notwithstanding that Mr. McBurnie never went to trial, were acknowledged by his defense counsel to constitute "fair consideration' and the "maximum reasonable amount' of fees and expenses for which Mr. McBurnie could possibly be entitled to be reimbursed.

“Marsh long ago addressed and moved beyond the issues that were the subject of the 2004 investigation,” the spokeswoman said. “The company intends to vigorously defend against this lawsuit.”

This is not the first time Marsh has been hit with a suit by former executives who lost their jobs during the Spitzer investigation.

Last year, two former Marsh Inc. executives whose bid-rigging convictions have been overturned have accused their former employer of violating federal law and breach of contract.

In a lawsuit filed in October 2010 in the U.S. District Court for the Southern District of New York against Marsh, MMC and two other of its units, William M. Gilman and Edward J. McNenney Jr. said Marsh fired them without cause in late 2004, shortly after then-New York Attorney General Eliot Spitzer filed a complaint against Marsh regarding contingent commissions.

Both men served as managing directors of Marsh.

The men allege Marsh did not pay them the severance to which they were contractually entitled. They also allege they were not paid stock bonuses to which they were entitled under the parent company's stock award plan.

They allege the brokerage's actions in regard to the severance pay and the stock bonuses violated the federal Employee Retirement Income Security Act.

Both men 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 each were found guilty in February 2008 on a single count of restraint of trade and competition. But in 2010, 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.”