Two Plead Guilty in CDR Case

WASHINGTON — Putting an end to the most high-profile criminal trial in the muni market since the mid-1990s, two former employees of CDR Financial Products pleaded guilty Monday afternoon to several criminal counts in connection with bid-rigging of investment and derivatives contracts for municipal bond proceeds, according to a source familiar with the matter.

Zevi Wolmark, CDR’s former chief financial officer and managing director, and Evan Andrew Zarefsky, a former vice president, will enter the pleas Monday in the U.S. District Court for the Southern District of New York in Manhattan, before Judge Victor Marrero.

The guilty pleas will come less than two weeks after David Rubin, founder of Beverly Hills-based CDR, pleaded guilty in the federal court in New York on Dec. 30 on behalf of himself and the firm to three criminal counts of bid-rigging, fraud conspiracy and wire fraud.

Rubin’s plea agreement, which was publicly released on Friday, reveals he told the Justice Department he wished to provide information about “potential violations of law” by himself “and others.”

In exchange, the Justice Department can evaluate whether to ask the judge for leniency at sentencing, based on Rubin’s assistance.

While jury selection had started on Jan. 3, the trial was not expected to begin until Jan. 9. But last week opening statements were postponed by one week, until Jan. 17, prompting some market participants to wonder if Zarefsky and Wolmark would also seek to enter guilty pleas.

CDR was the bidding agent for many of the contracts under scrutiny in parallel criminal and civil antitrust and securities-fraud probes that have been underway since 2005.

The Beverly Hills’s offices were raided by federal marshals in November 2006 along with the offices of Investment Management Advisory Group Inc., in Pottstown, Pa., and Sound Capital Management in Eden Prairie, Minn.

The Justice Department was expected to focus on CDR first and then pursue other firms.

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