Spitzer probe nails five individuals in two weeks with pleabargain deals

By DANIEL Hays

An executive with Liberty International Underwriters pleadedguilty in Manhattan Criminal Court to charges he was involved inbid-rigging with the Marsh insurance brokerage.

Kevin Bott, 36, of Middletown, N.J., was the fifth person in thelast two weeks to confess to charges developing from New YorkAttorney General Eliot Spitzer's ongoing probe of the insuranceindustry. It was the first court action to link Liberty to criminalactivity.

Since the investigation went public in October 2004, a total of16 individuals working at four insurers and Marsh have enteredpleas. In addition to Mr. Bott at Liberty, seven were employed atMarsh, four at American International Group, three at ZurichAmerican Insurance Company and one at ACE Ltd.

Mr. Bott, an assistant vice president with the Liberty Mutualsubsidiary in New York, worked in the Excess Casualty Division. Hepleaded guilty before Criminal Court Judge James Yates to attemptedcombination in restraint of trade and competition.

The charge carries up to a year in prison but is expected to bedropped in exchange for Mr. Bott's cooperation and testimony.

According to the complaint that was filed against him, Mr. Bott,while working at Liberty from 2001 to September 2004, was hiscompany's primary underwriter dealing with Marsh. Brokers at Marsh,it was alleged, instructed Mr. Bott to "submit quotes on businesswhere Marsh had predetermined which insurance carrier would win thebid."

According to the complaint filed by Confidential InvestigatorRobin Womack of the attorney general's office, Mr. Bott said he"understood that such quotes were intended to allow Marsh tocontrol the bidding process" and designed to let the carrier whohad the business keep their customer.

To do this he could either bid a higher price than the insurerwho had the business or provide less attractive terms for thecommercial insurance program, the complaint stated.

Marsh brokers, the complaint said, often gave Mr. Bott theamount bid by the carrier who held the business, a specific targetor a range within which to bid so he could ensure his proposal wasless favorable. He complied "on many occasions," according to thecomplaint.

"We are enormously disappointed by this development. To ourknowledge no other Liberty employee is under investigation," said aLiberty Mutual representative, John Cusalito. He said Liberty wasfirst subpoenaed in October of last year.