After looking at e-mails of Marsh & McLennan executives and learning they steered business to earn bonuses, Brown decided to drill down. He tweezed some specific deals out of the e-mail traffic. He’d trace them, beginning to end. Says Brown, “What cracked the case for us was to get all e-mails from specific deals.”
On September 9, Brown was on Amtrak, headed to Albany from Manhattan, when he got a message on his BlackBerry. “Just when you thought you’d seen it all,” it was titled. The attached document was from Munich-American RiskPartners, an insurer. It read, “This idea of ‘throwing the quote’ by quoting artificially high numbers in some predetermined arrangement for us to lose is repugnant to me . . .”
This hot doc suggested that rather than just steering a client to a particular insurer, Marsh & McLennan asked insurers to create fake bids. “This is the final, disgusting excrescence of fraud,” the fraud he’d been seeing all along, thought Brown.
Amtrak’s service to Albany travels along the Hudson, sometimes so close a passenger feels he’s riding on the water. Brown liked to get a seat with a view. Now, though, he buried his head in his BlackBerry, shooting the e-mail to others at the office and to Spitzer. He soon heard back. This wasn’t merely more of the same. “This is flat-out crime” was Spitzer’s thought. It was bid-rigging. By the time Brown’s train reached Albany, the investigation had changed.
Bid-rigging ushered in the criminal side of Spitzer’s office, his most aggressive lawyers, the people who, as Brown thought of it, took people away from their families. Peter Pope—the 46-year-old Yale Law School graduate and head of the criminal division—“is a hard-ass, capital H, capital A,” says one who works with him.
Brown had stoked the insurance investigation into a healthy blaze; Pope’s crew added gasoline.
Brown’s team had been organized by insurance brokerage, a group for the three largest brokers, Marsh & McLennan, Aon, and Willis, all of which were chugging along. The following day, September 10, it was reorganized. Brown’s lawyers teamed up with Pope’s lawyers. It was all Marsh, all the time now.
“We’re going to need somebody,” says Spitzer of his run for governor, “who can say, ‘Wait a minute: Here’s the problem, here are the facts, here are the value judgments.’ ”
Brown liked to send his lawyers to knock unannounced on witnesses’ doors. “We will come to your house at night the day we learn something,” says Brown. “We get raw, unfiltered, accurate information.” September 10, two lawyers headed to Florida to knock on the door of the sender of the “throwing the quote” e-mail. The witness wouldn’t let them in, so they stood on the porch, attacked by bugs, joined by the witness, who talked for two hours.
Pope, who’d prosecuted the mob when he was at the Manhattan district attorney’s office, soon understood that Marsh & McLennan was running an old-fashioned mob-style operation. The logic of the thing was clear. If an insurance broker is going to steer business to specified insurers, he’s got no choice. Clients want competing bids, so he’s got to concoct competing bids.
On September 14, an intern going through a box of e-mails related to insurance for the Greenville County, South Carolina, school district appeared in Brown’s office, quivering. He had an e-mail from a Marsh executive to insurer CNA, soliciting a phony bid. “I want to present a CNA program that is reasonably competitive, but will not be a winner,” it read. Marsh wanted another insurer, Zurich, to win the bid.
The attorney general’s office was moving at breakneck speed—“on adrenaline and caffeine,” Brown says. Three days later, on Friday, September 17, the “fictitious bids” subpoenas went to Marsh and also to insurers. One subpoena, sent from the criminal side, defined “fictitious bids,” then asked recipients to list “the fictitious bids” they had participated in. The deadline was a brisk two weeks.
The message was clear. As one prosecutor put it, “The jig is up.” The day of the deadline, American International Group, or AIG, and ACE, two giant insurance companies—in a strange twist, AIG is run by the father, ACE by the brother of Marsh & McLennan’s CEO—rushed into Spitzer’s office. They’d discovered bid-rigging, and they wanted to come in, eager to cooperate.
Marsh, it turned out, had a special vocabulary for its bid-rigging scheme. It referred to decoy quotes as “b quotes.” Marsh’s “game plan,” as one e-mail called it, was not easy to resist. Wrote one Marsh exec to insurer ACE, “We do not want to hear that you are not doing ‘b’ quotes or we will not bind”—sign up—“anything.” The threat was that ACE would get no more business from Marsh.
Insurers initially portrayed themselves as victims in a pay-to-play scheme. Lately, it wasn’t so clear. “One man’s extortion is another man’s bribe,” Brown came to realize. If insurers were going to pay—and they seemed resigned to it—they wanted more for their money. On April 15, 2002, Chubb offered to pay $1 million to Marsh for a “no shopping” policy for Chubb accounts. Under the unexecuted agreement, Marsh promised to renew Chubb customers. Chubb also wanted the business of the wealthy, an especially desirable line of insurance. This was Aon business. According to e-mails Brown saw, Chubb got angry when Aon showed Ivana Trump’s business to competitor AIG. So far, the insurance investigation has focused on the brokers. “A next phase will include insurers,” says Brown.
Eventually, Marsh followed AIG and ACE into Spitzer’s office to talk. But, as had become typical with the company, it dawdled. Rosoff showed up on October 12, by which time Brown had just about finished writing the complaint against the company. A press conference was set for two days later. And anyhow, Rosoff sounded the same patronizing theme: You have to understand the rich history of our business, which, Brown had by now decided, “is a scoundrelly argument, code for ‘We haven’t been regulated.’ ” Again Rosoff urged Brown, “You don’t understand our business. Don’t misinterpret. Please. Please.”