No Prison or Fine For Bid-Rigger Campbell

Former Bank of America executive Douglas Lee Campbell will serve no time, nor pay fines or restitution for his role in rigging municipal bond contracts.

At his sentencing Tuesday afternoon at the Daniel Patrick Moynihan Courthouse in lower Manhattan, Judge Kimba Wood of the U.S. District Court for the Southern District of New York said Campbell's eight and a half years of cooperation with prosecutors weighed in her decision.

"He was invaluable in assisting the government," she said in Room 18B. "For that reason he deserves the most lenient possible sentence."

Wood, while acknowledging that Campbell's crimes were "serious and pervasive," also said it would be difficult for Campbell to pay fines or restitution.

Campbell, once a senior vice president and marketer in Bank of America Corp.'s municipal derivatives group, pleaded guilty in September 2010 to three criminal counts of conspiracy and wire fraud. He admitted to conspiring to rig bids for municipal bond investment contracts, often offering "last looks" at competitors' bids, and paying kickbacks to Chambers, Dunhill, Rubin & Co., later CDR Financial Products Inc.

"I failed to live up to my responsibilities," he told the court Tuesday. "Worse, I failed the junior members of my team. I disrupted careers and I deeply regret that."

His case is part of a federal investigation of bid-rigging in the $3.8 trillion municipal bond market, which the U.S. Department of Justice alleges has cost municipal issuers and the Internal Revenue Service millions.

Bank of America, General Electric Co., JPMorgan Chase & Co., Wells Fargo & Co. and UBS AG have paid upwards of $743 million in restitution and fines, Wood estimated on Tuesday.

Campbell's case featured several sentencing delays, common if a convicted offender is a cooperating witness for the prosecution of a co-conspirator.

He testified in the federal case against former UBS AG bankers Gary Heinz, Peter Ghavami and Michael Welty in August 2012 that he paid them $175,000 in bribes 10 years earlier after the three cooked a muni bond deal in their favor.

"No cooperator in this government investigation/prosecution marathon started earlier, continued longer or provided more value to the United States," Campbell's attorney, Walter Mack of New York firm Doar Rieck Kaley & Mack, wrote Wood on Monday.

Mack told the court one day later: "He's a fine man and he's done his job."

U.S. Department of Justice antitrust attorneys Richard Powers and Rebecca Meiklejohn represented the government.

A jury convicted Heinz, Ghavami and Welty, also in August 2012, but they are asking the U.S. Court of Appeals for the Second Circuit in New York to overturn a lower court's decision on the basis of an expired statute of limitations, improper testimony and other alleged errors in their earlier trial.

General Electric bankers Dominick Carollo, Steven Goldberg, and Peter Grimm, also convicted for guaranteed investment contract bid-rigging, won their appeal in the same appellate court in December after making the same statute of limitations arguments.

In related cases, Wood imposed no fine or prison last month for former UBS banker Mark Zaino. Also in March, she imposed $5.6 million in fines and restitution on CDR Financial Products Inc. founder David Rubin, but no prison time.

The investigations centered on the award of municipal bond investment agreements.

Muni bond issuers typically select providers of investment agreements through competitive bidding designed to ensure bonds remain tax-exempt. Issuers often hire independent brokers to oversee the competitive bidding process.

The targets of the investigation were accused of conspiring to fix the results of such bids through techniques such as sharing so-called last looks at other bids and intentionally submitting losing bids so other firms would win.

As a result, the government argued, municipal bond issuers paid artificially high rates for the GICs.

Wood, a federal judge for 26 years, sentenced "junk bond king" Michael Milken to 10 years in 1990, although Milken only served two, plus three years' probation.

President Clinton considered Wood for U.S. attorney general in 1993, but withdrew after a controversy ensued over her hiring of a foreign-born nanny.

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