Spitzer Promises More Guilty Pleas

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By Arthur D. Postal, Washington Bureau Chief

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NU Online News Service, Jan. 31, 4:30p.m. EST,Washington?New York Attorney General Eliot Spitzer, whohas already secured criminal pleas from six insurance executives ina price-fixing scheme, said there will be "many more" pleas in thefuture.[@@]

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Mr. Spitzer's comments to a packed audience at the NationalPress Club came on the same day it was made public that his officehad reached an $850 million restitution settlement overprice-fixing charges with Marsh & McLennan Companies. Thecompany admitted no guilt.

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Mr. Spitzer told his audience that despite efforts to depict hisinsurance probe as unfair prosecution of "honest mistakes," he hasalready secured six pleas and there are "more to come veryshortly," and "many more to come down the road."

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He did not elaborate as to whether the new guilty pleas willdeal with Marsh & McLennan Inc., with whom he settled earlierin the day, a company involved in the probe of Marsh, or some othercompany in a probe separate from the Marsh probe.

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Michael Cherkasky, chief executive officer of MMC, in a pressbriefing said the agreement meant there would be no criminalprosecution of the company.

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Mr. Spitzer's reference to an attempt to attribute criminalityto "honest mistakes" was an apparent response to comments made byTom Donohue, president and CEO of the U.S. Chamber of Commerce.

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Several weeks ago, Mr. Donohue castigated Mr. Spitzer for hismoves against companies, saying he was acting as judge, jury andprosecutor. Mr. Spitzer speculated that Mr. Donohue's comments werepart of an all-out industry assault on the federal Sarbanes-Oxleycorporate accounting law.

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He defended his work as necessary, saying self-regulatoryagencies and the Securities and Exchange Commission were not beingaggressive in punishing wrongdoing in the insurance, mutual fund,brokerage and pharmaceutical industries.

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Reticent regulators reacting to his tactics, Mr. Spitzer said,told him the "industry ?won't like it.'"

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Mr. Spitzer called the Marsh agreement "wonderful in manyrespects," noting the company has adopted a new business model andforsaken acceptance of contingency commissions.

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His civil action against the company had accused MMC's Marshbrokerage unit of taking fees as a payoff from insurers who were inon a scheme to rig bids and fix prices for commercial insuranceclients that Marsh steered their way.

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Answering a question dealing with the settlement, in which Marshdid not admit or deny guilt, Mr. Spitzer said he did not impose afine because if he had done so, that money would have had to go tothe state under New York law. This way, he said, the money, whichconstituted a year's contingent compensation for Marsh, will goback to its customers.

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Mr. Spitzer, who announced last month he is a New Yorkgubernatorial candidate, used part of his talk to criticize theBush Administration's calls for private accounts for SocialSecurity with warnings that the self-regulatory system has"failed."

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Mr. Spitzer said the president is seeking to co-opt the benefitsDemocrats have given the middle class through creation of the SECand Social Security, among other programs.

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He also attacked President Bush's efforts to centralize handlingof class action lawsuits in federal courts.

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"The president is out there right now attacking many problemsthat drive premiums up," Mr. Spitzer said. "But I have not heardthe president mutter a single word about the insurance industryparticipation in illegal cartels."

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