Opening Statements in Bid-Rigging Trial Delayed, Prompting Plea Speculation

WASHINGTON — Opening statements in a federal criminal muni bid-rigging trial have been postponed one week, to Jan. 17 from Jan. 9, prompting some market participants to wonder whether the remaining defendants are seeking to negotiate guilty pleas.

The delay comes less than a week after David Rubin, the founder of Beverly Hills, Calif.-based CDR Financial Services, pleaded guilty in federal court in New York on behalf of himself and the firm to three criminal counts of bid-rigging, fraud conspiracy, and wire fraud. Rubin’s three counts carry maximum penalties of $1.5 million in criminal fines and 35 years in prison, according to the Justice Department.

A spokesperson for the court, Stephanie Cirkovich, confirmed the date change, saying opening statements are scheduled to begin before U.S. District Judge Victor Marrero at 9 a.m. on Jan. 17, the day after the federal holiday honoring Dr. Martin Luther King Jr.

Cirkovich said she did not know the reason for the change.

Jury selection began Monday for the trial of the remaining defendants, Zevi Wolmark, CDR’s former chief financial officer and managing director, and Evan Andrew Zarefsky, a former vice president.

CDR, Rubin, Zarefsky, and Wolmark were indicted on Oct. 29, 2009, for participating in bid-rigging and fraud conspiracies with several financial institutions and insurance companies.

Attorneys for Zarefsky and Wolmark could not be reached Wednesday for comment.

One market participant, who spoke on condition of anonymity, expressed hope that the defendants would plead guilty, sparing the industry the specter of an extended trial, potentially featuring evidence culled by DOJ from confidential informants who recorded conversations with other industry participants.

Last week, the defendants lost a bid to exclude certain evidence they claimed the government had improperly obtained during its wide-ranging investigation, which began in 2005.

In particular, they alleged certain confidential informants, during recorded conversations with various third parties, inquired into and elicited information that was potentially protected by attorney-client privilege, according to court documents.

In a five-page opinion and order, dated Jan. 30, a three-judge panel that included Marrero denied the defendants’ request, saying they had not met their burden to show “specific evidence of taint” affecting a substantial portion of the prosecution’s case.

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