Three former employees of CDR Financial Products Inc. who cooperated with the government's investigation into municipal bond bid-rigging were given prison terms ranging from six months to 18 months.
U.S. District Judge Harold Baer Jr. today sentenced CDR's former chief financial officer Z. Stewart Wolmark, ex-vice president Evan Zarefsky and former employee Matthew Rothman in separate hearings in Manhattan federal court. Wolmark got 18 months in prison, Zarefsky eight and Rothman six.
CDR was hired by public entities that issue municipal bonds to act as their broker and conduct a competitive bidding process for investing bond proceeds, according to prosecutors. Instead, some employees of Beverly Hills, California-based CDR took kickbacks for running sham auctions, prosecutors said.
CDR and another of its former chief executive officers, David Rubin, pleaded guilty in the bid-rigging scheme in December 2011. Rubin is scheduled to be sentenced June 28.
Prosecutors said Rubin took kickbacks for running sham auctions for investments. He faces as long as 35 years in prison and a fine of as much as $1.5 million, the U.S. said. CDR could be fined as much as $101 million. The fines may be increased to twice the amount gained from the crime or double the loss to victims, the government said.
Bank of America Corp., JPMorgan Chase & Co., UBS AG, Wells Fargo & Co. and General Electric Co. have all acknowledged that former employees engaged in illegal activity in connection with municipal bond bidding.
The case is U.S. v. Rubin/Chambers, Dunhill Insurance Services Inc., 09-cr-01058, U.S. District Court, Southern District of New York (Manhattan).