Guilty on all nine counts.
U.S. Justice Department antitrust prosecutors late Friday afternoon scored a clean sweep in the municipal bond bid-rigging trial in New York, as jurors in the fourth day of deliberation, and the 20th day of the trial, convicted Steven Goldberg, Peter Grimm and Dominick Carollo of wire fraud and conspiracy.
Goldberg faced four counts, Grimm three and Carollo two.
The government accused the three former executives of General Electric Co. affiliates of manipulating muni bond contracts from 1999 to 2006, saying they defrauded issuers such as cities, towns and counties, and the Internal Revenue Service of millions of dollars.
Prosecutors, during a trial that featured extensive use of audio tapes, maintained that the three engaged in a scheme that included providing so-called last looks at competitors’ bids, and collaborating with brokers through a system of back-end swap payments. The government identified the brokers as CDR Financial Products Inc., Investment Management Advisory Group Inc., or Image, and UBS Financial Services.
Shortly after the jury read the verdict at 3:35 p.m. in the U.S. District Court for the Southern District of New York in Manhattan, some of the defendants’ family members sobbed and defense attorneys sat stunned.
John Siffert of Siffert Lankler & Wohl LLP, Goldberg’s lead attorney, said the defense teams will file post-trial motions. “We’re talking about all three defendants. If we’re still not satisfied we’re looking at an appeal,” he said in a brief interview.
Walter Timpone and Howard Heiss, the lead attorneys for Carollo and Grimm, respectively, were not available immediately after the trial.
After Judge Harold Baer dismissed the jury and set dates for post-trial motions and sentencing of July 10 and Oct. 11, respectively, government prosecutors formed a phalanx around their lead, Wendy Waszmer, as they left courtroom 23B of the Daniel Patrick Moynihan Courthouse in Foley Square.
Approached for comment in the corridor, Waszmer declined, saying “I’ll have to refer you” to Justice Department officials. Messages were left with officials in Washington, D.C., seeking comment.
According to the Justice Department, conspiracy carries a maximum penalty of five years in prison and a $250,000 fine, per count. Each wire fraud charge carries a maximum penalty of 20 years in prison and a $1 million fine.
In winning, the government overcame the perjury of former broker Adrian Scott-Jones, a cooperating witness who said he spoke with Goldberg about swaps at a dinner between the two. The defense, however, played taped conversations in which brokers said Scott-Jones was out drinking and not at the dinner.
Baer dismissed one count for all three defendants, citing the perjury.
The judge continued a personal recognizance for the defendants, accepting a government request for one co-signer for each defendant. Siffert objected, saying the three have known for five years that they have been under investigation and have been under indictment for two.
“Conviction makes a change in everyone’s life,” said Baer. “I’ll grant the government’s motion.”
Baer praised jurors who deliberated for four days and made many requests for audio tapes — which were central to both government and defense strategies — and transcripts. “I was glad to have a jury like you. Not all have worked as hard,” the judge said.
Late Thursday, jurors sent a note to Baer asking how they should fill out a questionnaire if they could not decide unanimously on “a particular count for a specific defendant.” That raised the possibility of a divided jury. Baer told them to keep on deliberating.
The only note the jury sent Friday before deciding on a verdict was a request for all non-audio-related defense exhibits related to Carollo, and the testimony of Dani Naeh, a government witness and former CDR executive.
