Updated from 1:48 p.m. EST

A former broker at Marsh & McLennan ( MMC) pleaded guilty to criminal charges Thursday in a scheme to defraud customers by drumming up fake bids for insurance coverage. He's the first employee at the world's biggest insurance brokerage to be convicted in the scandal.

Robert Stearns, an executive vice president at Marsh Inc., the firm's insurance brokerage, pleaded guilty in a New York court to a charge of scheming to fraud in the first degree, a felony that carries a maximum four-year prison term.

The guilty plea from Marsh comes nearly three months after New York Attorney General Eliot Spitzer filed civil fraud charges against Marsh in a far-reaching kickback and bid-rigging scheme. Soon after the scandal broke, Marsh's CEO, Jeffrey Greenberg, resigned on Oct. 25, and several other executives were fired.

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

Stearns admitted to his role in a plot in which insurers were instructed to submit phony bids for insurance business that were used by Marsh to rig the market against its brokerage customers. Spitzer has alleged Marsh and several other brokers steered orders to insurers based on kickbacks and needed the phony bids to confer legitimacy on the scam.

The four-page felony complaint details the bid-rigging scheme and identifies by name several other Marsh employees as participants. The complaint also includes excerpts from several incriminating emails, which use colorful language and expletives to describe how the fake bids were obtained.

In one email, a Marsh broker sends an email to an insurance underwriter at Ace ( ACE), instructing him to come up with a phony bid for a project just for "s---s and giggles."

In another email exchange, Josh Bewlay, identified as the head of Marsh's global broking unit, instructs Stearns to get a several phony of "B quotes'' for a job.

"These noncompetitive bids allowed Marsh to control the market, to protect incumbent insurance carriers when their business was up for renewal, and to maximize Marsh's profits," Spitzer's office said in a statement.

Stearns is cooperating with Spitzer's office, as are five others who have made guilty pleas in the scandal. They include two employees from American International ( AIG), two from Zurich American Insurance and one from Ace.

Ann McDonald, Stearns' attorney, declined to comment.

Marsh issued a statement saying it is "saddened'' by the guilty plea and "will continue to cooperate fully'' with the investigation.

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