A third former employee of CDR Financial Products — Douglas Alan Goldberg — has pleaded guilty to three criminal counts for participating in bid-rigging and fraud conspiracies in connection with municipal finance investment and other contracts, the Justice Department announced yesterday.

Goldberg, a former senior vice president at the Beverly Hills-based firm and a current resident of Chatsworth, Calif., pleaded guilty to conspiracy to restrain trade, conspiracy and wire fraud.

He agreed to cooperate fully with the Justice Department, which has been conducting a criminal investigation of anticompetitive practices in the municipal market since at least November 2006.

Goldberg, from at least as early as 1998 until at least November 2006, worked with co-conspirators to allocate and rig bids for investment agreements and other muni finance contracts, according to U.S. attorneys.

Municipal issuers hired CDR to broker bids for such guaranteed investment contracts, derivatives and other municipal finance contracts.

Goldberg helped designate in advance the bids that would be submitted to CDR, the prices or price levels proposed, the firms that would submit losing bids, and the firm that would be selected the winning bidder, according to the Justice Department.

“The intentionally losing bids made it appear both to the municipalities that hired CDR as their broker and, where appropriate, to the IRS, that Goldberg and certain of the CDR co-conspirators solicited potential providers that would and did compete for those agreements and contracts when, in fact, they had not,” department attorneys stated in court documents.

Goldberg and the co-conspirators also falsified certifications that the bids were competitive and made in compliance with Treasury rules.

They further ensured that CDR would be paid kickbacks in the form of fees that were inflated relative to services whether they were performed or not. The “fees” were not disclosed to the issuers or to the IRS.

The Justice Department alleges that between November 2001 and August 2005, CDR received a number of kickbacks ranging in size from $4,500 to $475,000.

In many of these transactions, banks or broker-dealer firms served as both the senior underwriter on the bonds and the provider of investment agreements for the proceeds, Justice attorneys said.

Winning providers of agreements often increased their profits from the investment agreements by paying interest to issuers at artificially low rates, thereby engaging in a practice known as yield burning.

No sentencing date has been set, and may not be for some time while Goldberg cooperates with the Justice Department probe.

He faces a maximum sentence of 10 years in prison, supervised release of three years, and a fine of $1 million or more for the conspiracy to restrain trade. For conspiracy, he faces a maximum sentence of five years in prison, three years supervised release, and a fine of $250,000 or more. For wire fraud, he faces a maximum of 20 years, three years supervised release and a fine of $250,000 or more.

Kenneth Barish, a lawyer with Kajan Mather & Barish in Beverly Hills that represents Goldberg, could not be reached for comment.

Last Thursday, Mathew Adam Rothman, a former CDR vice president, pleaded guilty to similar criminal counts, and on Feb. 23 Daniel Moshe Naeh, who lived in Israel, pleaded guilty to similar counts as well. All of these individuals are cooperating with the Justice Department.

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