|Copyright:||(c) 2010 Targeted News Service|
|Source:||Targeted News Service|
Three former executives of a financial services company were indicted today for their participation in fraud schemes and conspiracies related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts, the
The six-count indictment was filed today in
“The individuals charged today allegedly participated in complex fraud schemes and conspiracies that subverted competition in the market for municipal finance contracts and deprived municipal bond issuers of the benefits of their investments to the detriment of the public,” said
The charged conspiracies and schemes all relate to a type of contract, known as an investment agreement, and other municipal finance contracts provided to public entities, such as state, county and local governments and agencies throughout
According to the indictment, the financial services company where Ghavami, Heinz and Welty worked was a wholly-owned subsidiary of a foreign-based financial institution that had its principal place of business in
According to the indictment, Ghavami, Heinz and Welty conspired with employees of various financial institutions to manipulate the bidding process for these agreements and contracts, by discussing with co-conspirators the price or price level their employers intended to bid and determining with their co-conspirators which financial institution would win a particular investment agreement or municipal finance contract.
The indictment also alleges that Ghavami, Heinz and Welty and their co-conspirators falsely certified that the bidding process on rigged deals was competitive and in compliance with U.S. Treasury regulations. This caused the municipal issuers to award investment agreements and other municipal finance contracts to providers that otherwise would not have been awarded the contracts, and in some instances, deprived the
The indictment further alleges that Ghavami, Heinz and Welty conspired with
Ghavami, Heinz and Welty are also charged with participating in a conspiracy and fraud schemes in their capacity as brokers and advisors to municipal bond issuers. According to the indictment, in different instances, Ghavami, Heinz and Welty, acting as brokers, accepted various kickbacks on behalf of their employer in exchange for manipulating the bidding process and steering investment agreements and other municipal finance contracts to certain financial institutions and entities. According to the indictment, their conduct caused investment agreements to be awarded at artificially determined price levels and deprived the municipal issuers or the U.S. Treasury of money to which they otherwise would have been entitled.
The indictment also charges Heinz with witness tampering in
“Some criminals may believe that the more complex the financing arrangements are, the easier it will be to avoid detection and financial investigation by the authorities,”
“The distinction between the conduct of these defendants and crooks who engage in traditional bid-rigging is a distinction without a difference,” said FBI Assistant Director-in-Charge Janice K. Fedarcyk. “Whether the collusive scheme involves contracts for street paving or trash collection or municipal bonds, fixing prices and colluding on bids is anticompetitive, harms the public, and is therefore in the crosshairs of the
One of the charged fraud conspiracies carries a maximum penalty of five years in prison and a
These maximum fines per count may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either amount is greater than the statutory maximum fine.
At a hearing yesterday, U.S. Magistrate Judge Dollinger refused to allow Ghavami to return to
The charges announced today resulted from an ongoing investigation conducted by the Antitrust Division’s
As part of this investigation, three former employees of CDR have pleaded guilty to bid-rigging and fraud conspiracies in relation to the ongoing investigation. Five other individuals have pleaded guilty to charges related to the ongoing investigation. In addition, three former financial services executives were indicted on
Today’s charges are part of efforts underway by President
Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s
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