President Obama's nominee for the U.S. Supreme Court, Judge Sonia Sotomayor, made her mark on the municipal bond market when she presided over a case in 1995 involving kickbacks for a New Jersey muni bond deal.
Sotomayor, a federal judge with the U.S. Court of Appeals for the Second Circuit, was tapped yesterday to replace retiring Justice David Souter. If confirmed by the Senate, she would be the first Hispanic to serve on the nation's highest court and the third woman. But her confirmation is likely to be controversial for some conservatives because of her liberal rulings."President Obama chose the most radical of all the frequently mentioned candidates before him," said Roger Pilon, vice president for legal affairs at the conservative Cato Institute. "There will likely be an extremely contentious confirmation battle ahead."
Fourteen years ago, as a judge with the U.S. District Court for the Southern District of New York in Manhattan, she sentenced Joseph Salema, a former chief of staff of former New Jersey Gov. Jim Florio, to two years of probation, six months in a halfway house, and six months of home detention for his role in a kickback scheme involving a Camden County Municipal Utilities Authority bond deal. She declined to grant U.S. attorneys' request for a prison sentence of at least a year, but fined him $10,000 and ordered him to perform 1,400 hours of community service.
Salema had pleaded guilty to one count of securities fraud in February of that year, admitting that he had not fulfilled his fiduciary duty to the utilities authority as financial adviser.
Salema co-owned New Jersey-based Consolidated Financial Management Inc., which served as financial adviser to the authority. Consolidated allegedly obtained $262,000 in illegal kickbacks from a $237.5 million bond issue the authority sold in 1990 before Salema served in Florio's administration.
Salema admitted to sharing in the kickbacks to steer the underwriting business to First Fidelity Bank, which was made senior manager. He faced a maximum prison term of 10 years and a fine of up to $250,000 and U.S. attorneys wanted him to serve time.
But Sotomayor rebuffed their request that Salema be sentenced to at least one year in prison, citing the fact that he had already paid $330,000 in restitution, and noted the number of letters the court received in support of him.
"The most common description of Mr. Salema was his loyalty, his honesty, his trustworthiness, and his great integrity," she said, according to a New York Times report of the case. "But it is impossible to reconcile those characteristics with the crime he is charged with here, and nearly impossible to use the words honesty or integrity."
It does not appear that Sotomayor has any investments tied to municipal bonds. The Washington Post reported earlier this month that her personal financial disclosure report for 2007 lists no assets but checking and savings accounts with Citibank.
Sotomayor joined the appeals court in 1998. She had been a federal court judge for about six years before that. Prior to becoming a judge she was a partner specializing in intellectual property litigation with the commercial litigation firm of Pavia & Harcourt LLP. Before joining that firm, she served as an assistant district attorney in New York County.
Sotomayor graduated summa cum laude from Princeton University in 1976, then obtained her law degree from Yale Law School in 1979.