Three defense attorneys in the municipal bond bid-rigging trial grilled a key government witness on Tuesday, looking to raise doubts about his memory and credibility.
During his second full day of testimony in the U.S. District Court for the Southern District of New York in Manhattan, Zevi “Stewart” Wolmark, 57, a former chief financial officer and managing director of Beverly Hills, Calif., brokerage CDR Financial Products Inc., faced tough questioning from John Siffert and Howard Heiss, who represent defendant Steven Goldberg, and Walter Timpone on behalf of Dominick Carollo.
The government accuses Goldberg, Carollo and Peter Grimm, all former executives of General Electric Co. affiliates, with having conspired with brokerages to fix bids for municipal bond-related contracts between August 1999 and September 2006, by using “last looks” at other bids, and kickbacks through back-end swap transactions.
Wolmark, who pleaded guilty in January to counts of bid-rigging, wire fraud and fraud conspiracy, is cooperating with the government.
With Siffert asking most of the questions in the Foley Square courtroom during the morning, the defense teams sought to expose inconsistencies among Wolmark’s testimony, audio tapes and transcripts of interviews with government officials.
“I can’t recall,” Wolmark told Siffert frequently.
Additionally, Wolmark was reluctant to answer questions “yes” or “no,” upon which the defense lawyers insisted.
“He still doesn’t get it, apparently,” Judge Harold Baer said at one point.
Siffert tried to show that issuers such as the New Jersey Health Care Financial Authority and the Missouri Health and Educational Facilities Authority were pleased with deals, and that they won bids on their own merits.
“You were the only person who was unhappy, is that right?” Siffert asked Wolmark, referring to the $17.5 million transaction in 2001 on behalf of Meridian Health System Inc.
“I thought we’d do a little better on the swap. I wasn’t euphoric, but I was [still] happy,” said Wolmark, who appeared grim-faced and spoke in a hesitant monotone throughout the questioning.
Handing the witness a simple calculator — to which U.S. Justice Department antitrust prosecutor Steven Tugander objected as grandstanding — Siffert questioned Wolmark about one of the Missouri bids, in which the issuer received about $241,000 extra because Goldberg bid 8 1/2 basis points above the cover, or second-highest bidder.
“The issuer got a quarter-million more by Steve winning the bid as opposed to the next-highest bidder,” said Siffert, whose client, among others, is accused of scheming to defraud municipal issuers and the Internal Revenue Service of millions of dollars.
Objections by the defense and prosecution — Siffert and Tugander, in particular, sparred frequently over the admission of evidence — triggered feisty exchanges among lawyers and Baer.
Baer, right before the jury arrived, lectured Siffert about inundating the court with documents when the latter tried to introduce Wolmark’s tax returns.
“These people don’t want to be here in the ordinary course of business, though you may be charming them, as dull as this case may be,” the judge said.
Timpone, attempting to distance Carollo from the alleged swap deals, said that after Goldberg left GE, the brokerage had complained to Carollo about not receiving enough back-end swaps.
Heiss also hammered at Wolmark’s credibility.
“Isn’t it true you told the government that CDR tried to do a swap on every deal with GE?” Heiss said. “That was false, wasn’t it?”
Wolmark answered: “No, it wasn’t false. We tried to do a swap whenever there wasn’t an opportunity to do a deal.”
