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Judge rejects former Marsh execs' claims of collusion between broker, Spitzer

Judge rejects former Marsh execs' claims of collusion between broker, Spitzer

NEW YORK (Reuters)—A federal judge rejected claims by two former Marsh & McLennan Cos. Inc. executives that the big insurance broker colluded with Eliot Spitzer when he was New York attorney general to make them scapegoats in a bid-rigging probe and avert criminal charges against their longtime employer.

The "conclusory" allegations by former executives William Gilman and Edward McNenney, who were prosecuted by Mr. Spitzer but later had their convictions thrown out, failed to support their claim of malicious prosecution, U.S. District Judge J. Paul Oetken in Manhattan wrote on Friday.

Mr. Spitzer in October 2004 accused Marsh of rigging bids for insurance contracts, and steering clients to favored insurers in exchange for kickbacks. Marsh agreed three months later to pay $850 million in a civil settlement with Mr. Spitzer.

Jeffrey Liddle, a lawyer for Messrs. Gilman and McNenney, declined to comment, saying he had not reviewed the decision.

A Marsh spokeswoman said the New York-based company is gratified with the decision.

The complaint contended that Marsh, whose chief executive Michael Cherkasky had once been Mr. Spitzer's boss in the Manhattan district attorney's office, "offered up" Messrs. Gilman and McNenney for criminal prosecution in exchange for Mr. Spitzer's agreement not to prosecute Marsh itself, and perhaps threaten its survival.

It also contended that Mr. Spitzer agreed to this because he was seeking the Democratic nomination to become New York governor, and wanted a large civil settlement to "trumpet in the press, along with successful criminal prosecution of selected individuals to further bolster his crime-fighting credentials."


But Judge Oetken said the claims were not sufficiently plausible, particularly because Mr. Spitzer had already been gathering evidence in a probe into insurer American International Group Inc., "including sworn testimony of an AIG employee implicating plaintiffs in the alleged anticompetitive scheme."

Judge Oetken dismissed several claims, including the malicious prosecution claim, "with prejudice," meaning they cannot be brought again. He let Messrs. Gilman and McNenney continue to pursue some smaller claims against Marsh.

Mr. Gilman had been an executive marketing director and Mr. McNenney a global placement director at Marsh, where they had worked a respective 28 years and 14 years. They brought the lawsuit to recover damages for lost severance and other payments.

Mr. Cherkasky was also a defendant in the lawsuit, and all claims against him were dismissed. His lawyer, Andrew Stern, said Mr. Cherkasky is "very pleased with the decision."

Messrs. Gilman and McNenney last August filed separate libel lawsuits totaling $90 million against Mr. Spitzer over a column he wrote in the online magazine Slate that advocated prosecution of corporate wrongdoers and defended his own enforcement activity.

That column did not name Mr. Gilman or Mr. McNenney, but referred to unnamed "employees of Marsh" linked to criminal conduct.

Mr. Spitzer did not immediately return a request for comment. Slate is owned by Washington Post Co.

The case is Gilman et al vs. Marsh & McLennan Cos. et al., U.S. District Court, Southern District of New York, No. 10-08158.