Three More Plead Guilty in Insurance Probe

The guilty pleas continue to pile up in the insurance industry bid-rigging scandal.

Three insurance executives, one from Marsh & McLennan(MMC Quote) and two from American International Group(AIG Quote), pleaded guilty Tuesday to fraud charges arising from the investigation led by New York Attorney General Eliot Spitzer. The latest pleas bring the number of insurance industry officials to be either criminally charged or convicted to nine.

Josh Bewlay, the former head of Marsh's global insurance broker division, is the second Marsh executive to plead guilty in the scandal. Last month Robert Stearns, an executive vice president at Marsh, pleaded guilty to a charge of scheming to fraud in the first degree.

Also pleading guilty Tuesday were two executives from AIG's liability insurance division, Carlos Coello and John Mohs.

The three insurance executives took part in a scheme to defraud customers by drumming up fake bids for insurance coverage.

In the scheme, Marsh executives instructed officials at some insurers to submit phony bids for insurance business. Spitzer has alleged Marsh steered orders to specific insurers based on kickbacks and needed the phony bids to confer legitimacy on the scam.

The guilty pleas come nearly four months after Spitzer filed civil fraud charges against Marsh in a far-reaching kickback and bid-rigging scheme. Marsh's CEO, Jeffrey Greenberg, resigned on Oct. 25, and several other executives were fired at Marsh.

Last month Marsh settled the litigation with Spitzer's office by agreeing to set up an $850 million restitution fund to reimburse corporate customers who were overcharged because of the bid-rigging and kickback scheme.

The investigation has since spread to other insurance brokers and insurers and other state regulators have joined in the inquiry.

In midday trading, shares of AIG were up 16 cents to $71.65, while Marsh's stock rose 23 cents to $32.53.