CRIMINAL COURT OF THE CITY OF NEW YORK
NEW YORK COUNTY
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THE PEOPLE OF THE STATE OF NEW YORK
-against-
FELONY COMPLAINT
ROBERT STEARNS, (AAG Whitman Knapp)
Defendant.
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STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
Confidential Investigator Sylvia Rivera of the Criminal Investigations Bureau of the New
York State Attorney General’s Office (OAG), being duly sworn, deposes and says that from
about September 2002 to about 2004, in the County of New York and elsewhere, the defendant
committed the offense of:
SCHEME TO DEFRAUD IN THE FIRST DEGREE, in violation of Penal Law
§190.65(1)(b), a class E felony,
in that defendant engaged in a scheme constituting a systematic ongoing course of conduct with
the intent to defraud more than one person and to obtain property from more than one person by
false and fraudulent pretenses, representations and promises, and so obtained property with a
value in excess of one thousand dollars from one or more such persons.
Defendant committed this crime as follows:
I have reviewed records provided to the OAG by attorneys representing Marsh, Inc.
(“Marsh”), an insurance brokerage in New York County. These records consist of e-mails
containing the statements of defendant and his accomplices. I have also reviewed records
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provided to the OAG by defendant containing his statements and those of his accomplices
consisting of e-mails, meeting notes and memoranda. Additionally, I have reviewed a written
report from Senior Confidential Investigator John McManus of the Criminal Investigations
Bureau recording statements made by defendant in a recent interview; I have, further, discussed
this interview with Investigator McManus.
From these sources, I am informed that from September of 2002 through 2004, defendant
and others at Marsh participated in a scheme with individuals at various insurance companies.
The goals of this scheme included controlling the market for excess casualty insurance coverage,
protecting incumbent insurance carriers when their business was up for renewal, and maximizing
Marsh’s profits.
During this time period, defendant and other Marsh personnel routinely arranged for and
instructed insurance company personnel to submit specific quotes for insurance coverage that the
Marsh and insurance company personnel knew were less favorable than those of the incumbent
carriers. These quotes were designed to ensure that the incumbent carriers would retain a
client’s business, and were variously referred to as “backup quotes,” “protective quotes,” “B
Quotes ” or “B’s.” They resulted in a rigged bidding process that defrauded insurance clients.
On numerous occasions, the insurance company personnel complied with these requests
by submitting such quotes, knowing that another insurance carrier would nonetheless win the
bid. By doing so, they assisted defendant and others at Marsh to obtain property with a value in
excess of $1,000 from more than one insurance client in the form of premiums, commissions and
fees.
I have reviewed business records provided by Marsh that confirm the existence of this
scheme:
In a March 19, 2003 e-mail exchange provided to OAG by the attorneys for Marsh,
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defendant wrote to his colleague, William McBurnie, in connection with one account: “Chubb
have quoted lead renewal at . . . $135,000. Would you please have AIG provide a B.” In an e-
mail sent several minutes later, defendant specified as follows: “A ‘B’ would be a quote from
AIG which is higher in premium and more restrictive in coverage thus, supporting the Chubb
quote.”
Likewise, in a March 11, 2003 e-mail to April Greenwood, a Marsh broker, defendant
instructed Greenwood in connection with another account: “Can you get me a B from Zurich.
Client will be binding with [incumbent] St. Paul at $270,000 all coverages as expiring. $325,000
should work.” Later that day, in another e-mail, defendant reiterated his request to Greenwood
to “have them issue a B on the lead at $325,000 or more.” The next day, an underwriter at
Zurich provided a $360,000 quote to Marsh.
Similarly, in a March 5, 2003 e-mail, Josh Bewlay, head of Marsh’s Global Broking Unit,
directed defendant: “Bob, could you get the quote from Pete. AIG was to hit 25 percent
increase. Then we need B quotes at the expiring attachments.” Further e-mails reflect that
Zurich, ACE and St. Paul subsequently offered losing quotes on this account. In one, Greg
Doherty, a Marsh broker, sent ACE underwriter James Williams a March 17, 2003 e-mail
instructing him as follows: “need a ‘B’ for shits and giggles.” The client renewed the insurance
policy with AIG.
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In addition, on October 29, 2003, defendant sent an informational e-mail to five of his
colleagues at Marsh’s Global Broking Unit, and attached a document that outlined some of the “.
. . very specific protocols on how we place business . . . .” The document provides, in part, as
follows: “Request ‘B’ quotes early b/c last week of every month markets only focus on ‘live’
opportunities vs. quoting B’s (careful that alternative ‘B’ doesn’t beat incumbents quote – it’s
not always price, it could be attachment point or coverage).”
FALSE STATEMENTS MADE HEREIN
ARE PUNISHABLE AS A CLASS A
MISDEMEANOR PURSUANT TO
SECTION 210.45 OF THE PENAL LAW
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SYLVIA RIVERA
NEW YORK STATE ATTORNEY GENERAL’S OFFICE
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