A key government witness against three former UBS AG municipal-bond executives in a bid-rigging trial was asked today whether he hated one of the men so much that he put photos of tortured cats on his desk.
Mark Zaino, a former employee on the bond desk at UBS’s New York office, told the jury that while he had joked with one of the defendants, Michael Welty, about cats, he didn’t remember placing specific images on Welty’s desk.
Zaino testified for the sixth day in Manhattan federal court in a criminal trial against Peter Ghavami, the former head of UBS’s municipal derivatives group, Welty and Garry Heinz, who were both vice presidents and municipal reinvestment marketers. The three are charged with conspiracy to defraud municipal-bond issuers and U.S. tax authorities by fixing prices on investing agreements.
Gregory L. Poe, a lawyer for Welty, questioned Zaino about how he felt about his former co-worker.
“You didn’t like Mr. Welty, did you?” Poe said. “You regarded him as very limited?”
Limited Abilities
Zaino said “at times” he thought Welty was an “idiot,” and that he thought Welty had limited technical abilities.
Later, Poe asked Zaino about testimony he gave earlier in the week alleging that Welty had improperly tipped off some bidders to ensure they won certain municipal bond deals.
The jury had heard audio recordings during Zaino’s earlier testimony of phone calls in which Welty asked bidders for their “indications” and told them when their suggested amount was significantly higher or lower than other bids received.
“It was perfectly appropriate to tell someone they’re wide or out of line, right?” Poe asked. A bidder “who made a mistake and was forced to accept the bid felt burned, right?”
Zaino said a bidder might stop working with a particular agent if the bidder felt the agent allowed him to submit an out- of-line bid. He said the “primary reason” he would let someone lower a bid was when he thought the bidder made a mistake.
The case is U.S. v. Ghavami, 10-cr-1217, U.S. District Court, Southern District of New York (Manhattan).
