NEW YORK — Peter Ghavami received a $1 million fine and an 18-month prison sentence on Wednesday as a federal judge slapped three former UBS AG bankers with fines and jail time  for municipal bond bid-rigging.

Kimba Wood of the U.S. District Court for the Southern District of New York in Manhattan sentenced Gary Heinz to 27 months and fined him $400,000, while Michael Welty received 16 months and a $300,000 fine for fraudulent schemes from 2001 to 2006.

A jury convicted the three last August.

Overall, the penalties were lighter than what U.S. Department of Justice antitrust prosecutors sought. In their sentencing memo to Wood, they sought prison terms for the three from 11 to 19 years.

Wood, citing the financial nature of the crime, emphasized fines more than jail, though she tempered the fines, saying “most of the victims have been made whole by the defendants’ employer.”

She imposed no restitution, adding that most of the victim’s losses are hard to quantify. The government objected, saying the bankers’ opaqueness contributed to the difficulty.

Wood also cited a Second Circuit ruling in 2008 that advised against “unwarranted disparities” among similar cases nationwide. She rejected the government’s request to punish Ghavami, Heinz and Welty more severely than Dominick Carollo, Peter Grimm and Steven Goldberg, who were sentenced in the same courtroom at the Daniel Patrick Moynihan courthouse last year.

Prosecutor Kalina Tulley said harsher prison time would have been more of a deterrent. “This industry has shown time and again that it is not easily deterred,” she said. “A large fine is not going to make up for a small prison sentence. In the financial community, it is merely the cost of doing business.”

Zurich-based UBS and other investment banks have paid roughly $700 million in settlements related to charges of defrauding municipal issuers, the U.S. Treasury, and the Internal Revenue Service by corruting the competitive bid process for bond transactions.

“It’s always a tough call as to the appropriate jail sentence for a serious but non-violent financial crime.  But this was also a matter of public markets and public trust, so it was a bit surprising, and fortunately for the defendants to be sure, that Judge Wood was more lenient that one would expect,” said Mineola, N.Y., white-collar defense attorney and St. John's University law professor Anthony Sabino.

Wood’s sentence on the multiple counts of conspiracy and wire fraud were concurrent. Heinz and Welty will serve three years of supervised release when their prison terms end, including 500 hours apiece of community service.

The judge did not assign community service to Ghavami, a Belgian national whom the government intends to deport when he completes his sentence.

“I sincerely regret that any person or entity has been harmed,” said Ghavami, whom federal officials arrested in December 2010 at Kennedy International Airport while he was heading a Russian investment bank.

Heinz received the most prison time, with Wood invoking testimony by former UBS banker Mark Zaino about Heinz telling him to “forget that rigged Massachusetts deal.”

While Ghavami was the most well-off financially among the three, Heinz’s lead attorney, Marc Mukasey of Bracewell & Giuliani LLP, said he was cash poor but had some property.

The trio and their lawyers pleaded on a common theme, citing their changed character and letters of support from family and friends. Mukasey said his client pulled a drowning mother out of the Hudson River and served on the board of St. Anthony’s High School in Jersey City, N.J.

But prosecutor Jennifer Dixton was unimpressed. “Mr. Heinz exploited every opportunity at UBS to cheat municipalities,” she said.

Wood at one point referred to a support letter for the wrong defendant.

“I’m sure he loves Welty, too,” said Mukasey.

Wood, a federal judge for 25 years, sentenced “junk bond king” Michael Milken to 10 years in 1990, although Milken only served two, plus three years’ probation. President Clinton considered Wood for U.S. attorney general in 1993, but withdrew after a controversy over her hiring of a foreign-born nanny.

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