WASHINGTON - Former employees of financial firms who have already pleaded guilty to rigging muni bond contracts will be allowed to testify in the upcoming bid-rigging trial against former UBS Financial Services Inc. bankers Peter Ghavami, Gary Heinz and Michael Welty, a judge ruled Tuesday.
The order by District Judge Kimba Wood allows prosecutors to call to the stand witnesses who they say can explain the meaning of "code words" the men used in recorded telephone conversations in 2001 and 2002.
The trial starts Monday in U.S. District Court for the Southern District of New York in Manhattan.
Prosecutors charged Ghavami, Heinz and Welty in 2010 with wire fraud and conspiracy. Heinz was also charged with witness tampering.
Prosecutors say they used ambiguous phrases like "baking in chambers" and "a little loose" to disguise a conspiracy to rig municipal bond contracts.
Prosecutors have said in court papers that witnesses could include a host of "co-conspirators," including former CDR Financial Products Inc. employees Mark Zaino, Doug Goldberg, Daniel Moshe Naeh, Matthew Rothman and Evan Andrew Zarefsky.
Former Bank of America employees Doug Campbell, and Brian Zwerner and James Hertz, who worked at JPMorgan Chase & Co., also could be called to testify.
Wood will allow testimony from witnesses who participated in the calls, such as Zaino, and from those who were not on the calls if they have direct knowledge of alleged wrongdoing.
Defense attorneys asked the judge to bar testimony from witnesses who did not participate in the transactions discussed on the recordings, and warned that those witnesses would compromise the jury's role as fact-finders by telling the jury what to conclude about the legality of transactions.
Wood called those concerns premature, but cautioned prosecutors not to elicit testimony from the witnesses about the defendants' intent and motivation.
