Guilty AIG Execs Still With Company
By Daniel Hays
NU Online News Service, Oct. 15, 12:37 p.m. EDT?Two executives who pled guilty to fraud charges yesterday in the insurance brokerage kickback scandal remain on the American International Group payroll, AIG Chairman Maurice Greenberg said today.[@@]
Karen Radke, 42, vice president of excess casualty, and National Accounts Manager Jean-Baptist Tateossian, 31, both with the AIG subsidiary American Home Insurance Company in New York, have each pled guilty to one count of scheming to defraud in the first degree.
A spokesperson for the New York Attorney General's Office–which brought charges against the two as part of an investigation that includes a massive civil suit against the Marsh brokerage for allegedly making billions from fixing prices with major insurers–said the charges are punishable by up to four years in prison.
Both were released on bail after an appearance before State Supreme Court Judge Michael Ambrecht in Manhattan and are due back in court for sentencing on Dec. 16. The date will likely be postponed because the two are cooperating the with Attorney General Eliot Spitzer's investigation.
"They pleaded to a felony charge, which I believe will be reduced to a misdemeanor," said Mr. Greenberg during a conference call with stock analysts. "The two have been put on leave and are the only ones at this point who have been put on leave," he said later.
Ms. Radke, according to the Attorney General's Office, has been with American Home since 2001, while Mr. Tateossian joined the firm in the middle of last year.
Mr. Greenberg said that after the Attorney General's Office subpoenaed the firm for information about brokerage contingent commissions, AIG began an investigation that "finally focused on the excess casualty department of American Home. There we uncovered two employees that acknowledged that they had participated in bids they were not certain they would ever get an order for the account on. We advised the Attorney General's Office promptly about that."
The civil suit that has been filed charges that Marsh solicited and obtained fictitious high quotes from insurers to deceive its clients into believing that true competition had taken place.
According to the Attorney General's Office, insurers who took part in the arrangement–which included paying substantial contingent commission fees–were rewarded by having business steered to them.
In 2003, a contingent commission agreement with AIG Risk Management, Inc. provided Marsh with a one percent bonus of all renewal premiums if its clients renewed with AIG at a rate of 85 percent or higher, according to the lawsuit. The suit charged that for a 90 percent renewal rate Marsh received a two percent bonus, and three percent for renewals at a 95 percent or higher rate.
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