WASHINGTON – Lawyers for three former bankers convicted in May of rigging bids for municipal bond contracts have filed appeals.
The appeals were filed late last week with the Court of Appeals for the Second Circuit in Manhattan by attorneys for Dominick Carollo, Steven E. Goldberg, and Peter Grimm, former employees at General Electric Co. affiliates.
The lawyers also filed papers asking the court, pending the outcome of the appeals, to release the bankers from their convictions, fines and prison sentences, which are scheduled to start Nov. 26 and last between three and four years.
The court, which will be closed until at least Monday, Nov. 5, due to Hurricane Sandy, will set briefing schedules for the appeals when it reopens, sources said.
A Justice Department spokesman declined to comment, saying department officials do not comment on a case in litigation.
Carollo, Goldberg and Grimm were found guilty of wire fraud and conspiracy on May 11 for their role in what prosecutors described as an elaborate plot to manipulate guaranteed investment contracts and other municipal bond agreements between 1999 and 2006.
Attorneys said the bankers’ actions defrauded issuers such as cities, towns and counties, and the Internal Revenue Service, depriving them of millions of dollars.
But the appeals documents said the government overreached in arguing that the conspiracy continues with successive interest payment on the bonds, some of which will continue until 2032.
“The government’s theory of when a conspiracy ends does not depend at all on whether there exists any ongoing conspiratorial conduct, or even whether the conspirators remain free or alive,” the lawyers said in court papers. “That outlandish theory of conspiracy has never been accepted by any court of appeals, and is not likely to be accepted by this court.”
Lawyers for the men argued that the alleged conspiracy occurred outside the statute of limitations period. They noted that the five-year statute of limitations for wire fraud expired in July 2005 and that the six-year limitation for conspiracy extended until July 2004.
The government indicted the men in July 2006, claiming that interest payments on the bonds furthered the conspiracy.
Lawyers say none of the former bankers had any involvement in the interest payments.
The attorneys had requested during the trial that the men be acquitted on the same grounds. The U.S. Court for the Southern District of New York denied those motions.
District Court Judge Harold Baer on Oct. 18 ordered the former bankers to serve prison time and pay fines. Carollo and Grimm were fined $50,000 each and ordered to serve three years in prison for each of three and two counts, respectively.
Goldberg was ordered to pay a $90,000 fine and to serve four years for each of four counts. The prison terms for each count are to be served concurrently.
Immediately after sentencing, Walter Timpone, Carollo’s lawyer, suggested that the bankers would appeal, telling The Bond Buyer that statute of limitations provisions were the defense’s strongest argument.
“We feel very confident,” he said.
Calls to Timpone, a partner at McElroy, Deutsch, Mulvaney & Carpenter LLP in Morristown, N.J., and attorneys for the other bankers were not returned.
Goldberg was ordered to serve prison time at the medium-security Federal Correctional Institution Schuylkill in Minersville, Pa. Carollo will report to the minimum-security Federal Prison camp in Pensacola, Fla., and Grimm will report to a low-security federal prison at the military Joint Base McGuire-Dix-Lakehurst in New Jersey, according to court papers.
