The judge in the municipal bond bid-rigging case in New York said Tuesday he is inclined to strike the testimony of a questionable governmental witness who did not return for cross-examination last week, but let the trial continue.

“I’ve not yet concluded how to handle the [Adrian] Scott-Jones testimony, but I’m leaning toward striking all of it and denying any motions for a mistrial,” said Judge Harold Baer of the U.S. District Court for the Southern District of New York in Manhattan.

Scott-Jones, of Morriston, Fla., testified for the government late last week about swap agreements, but in cross-examination, defense attorney John Siffert played tapes that appeared to contradict what the former broker said on the stand, including a dinner he told prosecutors he had attended with defendant Steven Goldberg, whom Siffert represents.

Scott-Jones did not return for later questioning. Attorneys Mark Racanelli and Walter Timpone, representing Peter Grimm and Dominick Carollo, respectively, have joined Siffert in requesting a mistrial.

The government accuses Goldberg, Grimm and Carollo, all former executives of General Electric Co. affiliates, of conspiring with brokerages to fix bids for municipal bond contracts between August 1999 and September 2006. The trial began April 16.

Scott-Jones pleaded guilty on Sept. 8, 2010, to participating in two separate fraud conspiracies, and agreed to participate with the U.S. Justice Department. Scott-Jones worked, among other places, as a consultant to Tradition (North America), and EuroBrokers.

The government said Scott-Jones gave co-conspirator providers information about prices, price levels or conditions in competitors’ bids — also known as “last looks,” which U.S. Treasury regulations prohibit. Officials also allege that Scott-Jones solicited and received intentionally losing bids for certain investment agreements and other municipal finance contracts.

Through bid manipulation, the government charges, the providers won contracts at artificially determined price levels, shortchanging municipal issuers in the process. Scott-Jones’ sentencing is scheduled for June 22 in the Manhattan court.

The Justice Department has declined comment on Scott-Jones’ situation, although Antonia Hill, one of four prosecuting attorneys working on the case in the Foley Square courtroom, told Baer on Monday, “The government agrees that Mr. Scott-Jones is not returning.” No further information was available.

Also on Tuesday, prosecutors played tapes of conversations Grimm and Goldberg had with personnel from brokerage Investment Management Advisory Group Inc., or Image, about bond bids.

Additionally, the government introduced bid documents related to Image deals involving the Kentucky Economic Development Finance Authority, the Idaho Housing and Finance Association, the University of Nebraska Facilities Corp.  and the New Jersey Educational Facilities Authority.

“Baby needs new shoes, man,” Peter Loughead, who ran bids for Image, told Goldberg, one audio transcript said.

Tapes related to a revenue bond transaction by the New Jersey conduit issuer for William Paterson University in 2004 showed Loughead and Goldberg discussing the bid.

Goldberg: “Who’s cover [the next-highest bid]?

Loughead: “Uh, Citi. One three eight five. ... Aegon one three eight.”

The government then produced a document showing Goldberg’s firm, Financial Security Assurance, winning the bid at 1.39%, edging Citi’s 1.385%.

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