New York Field Office, Antitrust Division

12/19/2012 – UBS Securities Japan to Plead Guilty to Felony Wire Fraud For Long Running Manipulation of LIBOR Benchmark Interest Rates

12/19/2012 – NJ Company Pleads Guilty For Role in Bid Rigging Scheme at Municipal Tax Lien Auctions

 

 

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TWO FORMER HOSPITAL EMPLOYEES SENTENCED TO SERVE TIME IN
PRISON FOR PARTICIPATING IN KICKBACK SCHEMES AT NEW YORK CITY
HOSPITAL

WASHINGTON — Two former high-ranking employees of facilities operations at New York Presbyterian Hospital (NYPH) were sentenced in U.S. District Court for the Southern District of New York, in Manhattan, by Judge George B. Daniels today for their participation in two separate conspiracies involving kickbacks, the Department of Justice announced today.

Santo Saglimbeni, a former vice president of facilities operations at NYPH, was sentenced to serve 48 months in prison and ordered to pay a $250,000 criminal fine. Emilio “Tony” Figueroa, a former director of facilities operations at NYPH, was sentenced to serve 36 months in prison and ordered to pay a $25,000 criminal fine. Saglimbeni and Figueroa were ordered to jointly and severally pay $603,982 in total restitution to NYPH. Judge Daniels also entered a preliminary order of forfeiture for $2.3 million, which included certain bank accounts into which the kickback money from one of the schemes was deposited, as well as a parcel of land purchased with a portion of the kickback money, in Southampton, N.Y.

“Today’s sentences are consistent with the serious nature of the crimes for which the individuals were convicted,” said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice’s Antitrust Division. “The division remains committed to holding accountable corrupt purchasing officials who undermine the competitive bidding process for their personal gain.”

On Feb. 2, 2012, after a four-week trial, Saglimbeni and Figueroa, along with Michael Yaron and two companies owned by him—Cambridge Environmental & Construction Corp., doing business as National Environmental Associates (Cambridge/NEA), and Oxford Construction & Development Corp.; Moshe Buchnik, the president of an asbestos abatement company doing business at NYPH; and Artech Corp., a sham company Saglimbeni created in the name of his mother, were each convicted of conspiracy to defraud NYPH. Additionally, Yaron, Cambridge/NEA, Oxford, Buchnik, Saglimbeni and Artech were also convicted of a wire fraud violation.

According to evidence presented at trial, the scheme to defraud NYPH centered on Saglimbeni, who with the assistance of Figueroa, awarded asbestos abatement, air monitoring and general construction contracts to Yaron, Buchnik and their companies in return for more than $2.3 million in kickbacks paid to Saglimbeni. A portion of those kickbacks were funneled by Yaron to Saglimbeni through Artech.

On July 31, 2012, Saglimbeni and Figueroa each pleaded guilty to additional mail fraud conspiracy and mail fraud violations. These charges were part of the same indictment but had been severed and were scheduled for a separate trial. According to the superseding indictment, the fraud scheme also centered on Saglimbeni, who with the assistance of Figueroa, awarded heating, ventilation and air conditioning (HVAC) contracts to an HVAC vendor in return for kickbacks in the form of cash goods and services paid to Saglimbeni and Figueroa.

On July 10, 2012, Yaron, Buchnik and the three companies were sentenced for their respective roles in the scheme. Yaron was sentenced to serve 60 months in prison and ordered to pay a $500,000 criminal fine. Buchnik was sentenced to serve 48 months in prison and ordered to pay a $500,000 criminal fine. Yaron’s companies, Cambridge/NEA and Oxford Construction, were each sentenced to pay a $1 million criminal fine. Artech was also sentenced to pay a $1 million criminal fine. Including Saglimbeni and Figueroa, 15 individuals and six companies have been convicted or pleaded guilty as a result of this investigation and have been sentenced to pay a total of more than $4 million in criminal fines and to serve more than 16 years in prison.

This antitrust investigation of bid rigging, fraud, bribery and tax-related offenses relating to the award of contracts by the facilities operations department of NYPH was conducted by the Antitrust Division’s New York Field Office with the assistance of the FBI and the Internal Revenue Service – Criminal Investigation’s New York Field Office. The Office of International Affairs in the Justice Department’s Criminal Division also provided assistance. Anyone with information concerning bid rigging, bribery, tax offenses or fraud related at NYPH should contact the Antitrust Division’s New York Field Office of the at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm, or call the FBI’s New York Division at 212-384-1000.

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THREE FORMER FINANCIAL SERVICES EXECUTIVES SENTENCED TO SERVE
TIME IN PRISON FOR ROLES IN CONSPIRACIES INVOLVING INVESTMENT
CONTRACTS FOR THE PROCEEDS OF MUNICIPAL BONDS

WASHINGTON — Three former financial services executives were sentenced today in U.S. District Court for the Southern District of New York, for their participation in conspiracies related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts, the Department of Justice announced. The three former executives were convicted after a three week trial on May 11, 2012.

Dominick P. Carollo, Steven E. Goldberg and Peter S. Grimm, all former executives of General Electric Co. (GE) affiliates, were sentenced by District Court Judge Harold Baer Jr. for their roles in the conspiracies. Carollo was sentenced to serve 36 months in prison and to pay a $50,000 criminal fine. Goldberg was sentenced to serve 48 months in prison and to pay a $90,000 criminal fine. Grimm was sentenced to serve 36 months in prison and to pay a $50,000 criminal fine.

“By manipulating the competitive bidding process, the conspirators cheated cities and towns out of money for important public works projects,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “The division and its law enforcement partners remain committed to rooting out such corruption.”

According to evidence presented at trial, while employed at GE affiliates, Carollo, Goldberg and Grimm participated in separate fraud conspiracies with various financial institutions and insurance companies and their representatives from as early as 1999 until 2006. These institutions and companies, or “providers,” offered a type of contract, known as an investment agreement, to state, county and local governments and agencies throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Goldberg also participated in the conspiracies while employed at Financial Security Assurance Capital Management Services LLC.

At trial, the Department of Justice asserted that Carollo, Goldberg, Grimm and their co-conspirators corrupted the bidding process for dozens of investment agreements to increase the number and profitability of investment agreements awarded to the provider companies where they were employed. Carollo, Goldberg and Grimm deprived the municipalities of competitive interest rates for the investment of tax-exempt bond proceeds that were to be used by municipalities for various public works projects, such as for building or repairing schools, hospitals and roads. Evidence at trial established that they cost municipalities around the country millions of dollars.

“Today’s sentencing of Carollo, Goldberg and Grimm for their involvement manipulating a competitive bidding process of public contracts is the final step in a case that demonstrates the FBI’s commitment to investigate and prosecute those who illegally influence the financial markets for their own profit,” said Mary E. Galligan, Acting Assistant Special Agent Charge of the FBI in New York. “The co-conspirators scheme over many years deprived municipalities across the country of competitive interest rates on bonds, a yield that most cities would say they greatly need. The FBI will continue to work with our law enforcement partners to enforce the laws that protect our financial markets.”

“The sentences handed down today send a clear message that crime motivated by outright greed will land you in jail,” said Richard Weber, Chief, Internal Revenue Service – Criminal Investigation (IRS-CI). “Quite simply, the defendants stole money from taxpayers and conspired to manipulate the competitive bidding system to benefit themselves instead of the towns and cities that needed this money for important public works projects. IRS Criminal Investigation is committed to working with our law enforcement partners to uncover this kind of corruption and secure justice for American taxpayers.”

Carollo was found guilty on two counts of conspiracy to commit wire fraud and defraud the United States, Goldberg was found guilty on four counts of conspiracy to commit wire fraud and defraud the United States and Grimm was found guilty on three counts of conspiracy to commit wire fraud and defraud the United States.

A total of 20 individuals have been charged as a result of the department’s ongoing municipal bonds investigation. Including today’s convictions, a total of 19 individuals have been convicted or pleaded guilty, and one awaits trial. Additionally, one company has pleaded guilty.

The sentences announced today resulted from an ongoing investigation conducted by the Antitrust Division’s New York Office, the FBI and the IRS-CI. The division is coordinating its investigation with the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.

Today’s convictions are part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-335-8000, the FBI at 212-384-5000 or IRS-CI at 212-436-1761, or visit www.justice.gov/atr/contact/newcase.htm.

 

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THREE FORMER UBS EXECUTIVES CONVICTED FOR FRAUDS INVOLVING CONTRACTS RELATED TO THE INVESTMENT OF MUNICIPAL BOND PROCEEDS

WASHINGTON — A federal jury in New York City today convicted three former financial services executives for their participation in frauds related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts, the Department of Justice announced.

Peter Ghavami, Gary Heinz and Michael Welty, all former UBS AG executives, were found guilty on conspiracy and fraud charges in the U.S. District Court in New York City. Ghavami was found guilty on two counts of conspiracy to commit wire fraud and one count of substantive wire fraud. Heinz was found guilty on three counts of conspiracy to commit wire fraud and two counts of substantive wire fraud. Welty was found guilty on three counts of conspiracy to commit wire fraud. Heinz was found not guilty on one count of witness tampering and Welty was found not guilty on one count of substantive wire fraud.

The trial began on July 30, 2012. Ghavami, Heinz and Welty were initially indicted on Dec. 9, 2010.

“For years, these executives corrupted the competitive bidding process and defrauded municipalities across the country out of money for important public works projects,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program. “Today’s convictions demonstrate that the division is committed to holding accountable those who seek to unfairly and illegally undermine competitive markets.”

According to evidence presented at trial, while employed at UBS, Ghavami, Heinz and Welty participated in separate fraud conspiracies and schemes with various financial institutions and with a broker, at various time periods from as early as March 2001 until at least November 2006. These financial institutions, or providers, offered a type of contract—known as an investment agreement— to state, county and local governments and agencies, and not-for-profit entities, throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Public entities typically hire a broker to assist them in investing their money and to conduct a competitive bidding process to determine the winning provider.

According to evidence presented at trial, while acting as providers, Ghavami, Heinz and Welty, with their provider and broker co-conspirators, corrupted the bidding process for more than a dozen investment agreements to increase the number and profitability of the agreements awarded to UBS.  At other times, while acting as brokers, Ghavami, Heinz, Welty and their co-conspirators arranged for UBS to receive kickbacks in exchange for manipulating the bidding process and steering investment agreements to certain providers.

Ghavami, Heinz and Welty deprived the municipalities of competitive interest rates for the investment of tax-exempt bond proceeds that were to be used by municipalities to refinance outstanding debt and for various public works projects, such as for building or repairing schools, hospitals and roads. Evidence at trial established that they cost municipalities around the country and the U.S. Treasury millions of dollars.

During the trial, the government presented specific evidence relating to approximately 26 corrupted bids and approximately 76 recorded conversations made by the co-conspirator financial institutions. Among the issuers and not-for-profit entities whose agreements or contracts were subject to the defendants’ schemes were the Commonwealth of Massachusetts, the New Mexico Educational Assistance Foundation, the Tobacco Settlement Financing Corporation of Rhode Island and the RWJ Health Care Corp at Hamilton.

“Corrupt bidding schemes serve to weaken the public’s trust in the municipal bond market and prevent public entities from enjoying the benefits of a true competitive bidding process,” said Mary E. Galligan, Acting Assistant Director in Charge of the FBI in New York. “Today’s conviction is further proof of our efforts to weed out these corrupt criminals and ensure justice is served.”

“Today’s verdict is important because it confirms that these complex, seemingly uninteresting backroom deals have a real impact on taxpayers, who should benefit from a municipal bond issue and are ultimately responsible for paying it off,” said Richard Weber, Chief, Internal Revenue Service-Criminal Investigation (IRS-CI). “Today’s convictions send a strong message to the municipal bond industry and demonstrates the commitment of the Internal Revenue Service and the Justice Department to rid the industry of corrupt practices.”

A total of 20 individuals have been charged as a result of the department’s ongoing municipal bonds investigation. Including today’s convictions, a total of 19 individuals have been convicted or pleaded guilty, and one awaits trial. Additionally, one company has pleaded guilty.

Two of charged fraud conspiracies carry a maximum penalty per count of 30 years in prison and a $1 million fine.  A third fraud conspiracy charge carries a maximum penalty of five years in prison and a $250,000 fine.  The two wire fraud charges carry a maximum penalty per count of 30 years in prison and a $1 million fine.  These maximum fines per count may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either amount is greater than the statutory maximum fine.

The verdict announced today resulted from an ongoing investigation conducted by the Antitrust Division’s New York and Chicago Offices, the FBI and the IRS-CI. The division is coordinating its investigation with the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.

Today’s convictions are part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-335-8000, the FBI at 212-384-5000 or IRS-CI at 212-436-1761, or visit www.justice.gov/atr/contact/newcase.htm.

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PENNSYLVANIA CORPORATION PLEADS GUILTY TO BID RIGGING AT
MUNICIPAL TAX LIEN AUCTIONS IN NEW JERSEY

WASHINGTON — A Pennsylvania corporation pleaded guilty today to participating in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities throughout New Jersey, the Department of Justice announced.

A felony charge was filed today in the U.S. District Court for the District of New Jersey in Newark, against Crusader Servicing Corp., of Jenkintown, Pa. According to the felony charge, from at least as early as 1998 until September 2006, Crusader participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders which liens each would bid on. The department said that Crusader submitted bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.

“The conspirators agreed to not compete with one another at these tax lien auctions, depriving struggling homeowners of a competitive interest rate,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.  “Today’s guilty plea demonstrates the Antitrust Division’s continuing efforts to prosecute those who manipulate the competitive process in order to harm home and property owners.”

The department said that the primary purpose of the conspiracy was to suppress and restrain competition to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.

According to the court documents, Crusader conspired with others not to bid against one another at municipal tax lien auctions in New Jersey. Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.

A violation of the Sherman Act carries a maximum penalty of $100 million criminal fine for corporations. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than the statutory maximum.

Today’s plea is the 10th guilty plea resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions.  Eight individuals — Isadore H. May, Richard J. Pisciotta Jr., William A. Collins, Robert W. Stein, David M. Farber, Robert E. Rothman, Stephen E. Hruby and David Butler — and one company, DSBD LLC, have previously pleaded guilty as part of this investigation.

Today’s charge is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

The ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J. office. Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the FBI’s Atlantic City Resident Agency at 609-677-6400.

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TWO FORMER HOSPITAL EMPLOYEES PLEAD GUILTY TO PARTICIPATING IN KICKBACK SCHEME AT NEW YORK CITY HOSPITAL

WASHINGTON — Two former high-ranking employees of facilities operations at New York Presbyterian Hospital (NYPH) pleaded guilty today to an indictment charging them with conspiring to defraud NYPH, the Department of Justice announced.

Former vice president of facilities operations, Santo Saglimbeni, and former director of facilities operations, Emilio “Tony” Figueroa, were charged in a four-count superseding indictment filed on June 16, 2011.  Saglimbeni, who was charged on all four counts, was convicted of counts one and two on Feb. 2, 2012.  Figueroa, who was charged on counts one, three and four, was convicted on count one on Feb. 2, 2012.  Counts three and four were severed from that indictment, and Saglimbeni and Figueroa pleaded guilty in the U.S. District Court in Manhattan to those counts today.

Saglimbeni and Figueroa pleaded guilty today for their participation in a mail fraud conspiracy, which lasted from as early as June 2001 and continued through June 2006.  The scheme to defraud NYPH centered on Saglimbeni, who with the assistance of Figueroa, awarded contracts for the installation and repair of heating, ventilation and air conditioning systems (HVAC), to a co-conspirator’s company in return for kickbacks given to Saglimbeni and Figueroa in the form of cash, goods and services from that co-conspirator.  Saglimbeni and Figueroa also pleaded guilty to a substantive mail fraud offense based upon a payment made to the co-conspirator by NYPH on an HVAC contract awarded in furtherance of the HVAC conspiracy.

“By awarding contracts in return for kickbacks, Saglimbeni and Figueroa used their positions to subvert the competitive bidding process for essential services at NYPH,” said Joseph Wayland, Acting Assistant Attorney General in charge of the Justice Department’s Antitrust Division.  “Today’s guilty pleas demonstrate the Antitrust Division’s commitment to holding purchasing officials accountable for this type of illegal conduct.”

On Feb. 2, 2012, after a four week trial, Saglimbeni and Figueroa were convicted of the first two counts of the indictment.  At the trial, Michael Yaron and two companies owned by him, Cambridge Environmental & Construction Corp., which does business as National Environmental Associates (Cambridge/NEA), an asbestos abatement company, and Oxford Construction & Development Corp., a construction company; Moshe Buchnik, the president of two asbestos abatement companies; and Artech Corporation, a company owned by a relative of Saglimbeni, were also convicted of conspiracy to defraud NYPH.  Yaron, his companies, Buchnik, Saglimbeni and Artech were also convicted of a substantive wire fraud violation.

These convictions centered on a scheme to defraud NYPH, whereby Saglimbeni, who with the assistance of Figueroa, awarded asbestos abatement, air monitoring and general construction contracts to Yaron, Buchnik and their companies in return for more than $2.3 million in kickbacks paid to Saglimbeni.  Those kickbacks were funneled by Yaron to Saglimbeni through Artech, a sham company Saglimbeni created in the name of his mother.

Each count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine of $250,000 for individuals.  The fine may be increased to twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime by the conspirators.

Including today’s pleas, 15 individuals and six companies have been convicted or pleaded guilty to charges arising out of this federal antitrust investigation.  On July 10, 2012, Yaron was sentenced to serve 60 months in jail and Buchnik was sentenced to serve 48 months.  Each was sentenced to pay a $500,000 criminal fine. Cambridge/NEA, Oxford and Artech, were each sentenced to pay a $1 million criminal fine.

The investigation was conducted by the Antitrust Division’s New York Field Office with the assistance of the FBI and the Internal Revenue Service – Criminal Investigation’s New York Field Office.  The Office of the International Affairs in the Justice Department’s Criminal Division also provided assistance.  Anyone with information concerning bid rigging, bribery, tax offenses or fraud related to NYPH should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm, or call the FBI’s New York Division at 212-384-1000.

 

 

 

 

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FORMER FINANCIAL SERVICES EXECUTIVE INDICTED FOR HIS
PARTICIPATION IN A FAR-REACHING CONSPIRACY AND SCHEME TO
DEFRAUD INVOLVING INVESTMENT CONTRACTS FOR THE PROCEEDS OF
MUNICIPAL BONDS

WASHINGTON — A former financial services executive was indicted yesterday for his participation in a far-reaching conspiracy and scheme to defraud related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts, the Department of Justice announced.

The three-count indictment was filed yesterday in the U.S. District Court in Charlotte, N.C. The indictment charges Phillip D. Murphy, a former executive for a financial institution, with participating in a wire fraud scheme and separate fraud conspiracies from as early as 1998 until 2006.

The charged conspiracies and scheme to defraud relate to the provision of a type of contract, known as an investment agreement, to public entities, such as state, county and local governments and agencies throughout the United States. Major financial institutions, including banks, investment banks, insurance companies and financial services companies, are among the providers of investment agreements and other related municipal finance contracts. Public entities seek to invest money from a variety of sources, primarily the proceeds of municipal bonds that they issue to raise money for, among other things, public projects. Public entities typically hire a broker to conduct a competitive bidding process among various providers for the award of an investment agreement to invest such money. Competitive bidding for these agreements is the subject of regulations issued by the U.S. Department of the Treasury and is related to the tax-exempt status of the bonds. The company that employed Murphy marketed financial products and services, including services as a provider of investment agreements.

“The individual charged yesterday allegedly participated in a complex fraud scheme and conspiracies to manipulate what was supposed to be a competitive process,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s Criminal Enforcement Program. “The division recently convicted at trial several individuals in this investigation, which is ongoing. We will continue to prosecute those who engage in such illegal and anticompetitive behavior.”

The indictment charges that Murphy conspired with Rubin/Chambers, Dunhill Insurance Services Inc., also known as CDR Financial Products (CDR), a broker of municipal finance contracts, and others to increase the number and profitability of investment agreements and other municipal finance contracts awarded to the provider company where Murphy was employed. Murphy won investment agreements through CDR’s manipulation of the bidding process in obtaining losing bids from other providers, which is explicitly prohibited by U.S. Treasury regulations. As a result of the information, various providers won investment agreements and other municipal finance contracts at artificially determined prices. In exchange for this information, Murphy submitted intentionally losing bids for certain investment agreements and other contracts when requested, and, on occasion, agreed to pay or arranged for kickbacks to be paid to CDR and other co-conspirator brokers.

The indictment also alleges that Murphy and co-conspirators misrepresented to municipal issuers or bond counsel that the bidding process was in compliance with U.S. Treasury regulations. This caused the municipal issuers to award investment agreements and other municipal finance contracts to providers that otherwise would not have been awarded the contracts if the issuers had true and accurate information regarding the bidding process. Such conduct placed the tax-exempt status of the underlying bonds in jeopardy.

According to court documents, the efforts by Murphy and his co-conspirators to control and manipulate the bidding for investment contracts, and the execution of a variety of certifications that covered up their scheme, also obstructed the Internal Revenue Service (IRS)’s ability to monitor compliance with U.S. Treasury regulations and impeded the IRS’s ability to determine whether municipal issuers had correctly accounted for any money that was owed to the U.S. Treasury.

In a separate count, the indictment charges that Murphy conspired with others to falsify bank records related to marketing profits so that the co-conspirators could pay the kickbacks to CDR and others.

“Yesterday’s charges outline a fraudulent scheme to subvert competition in the marketplace. Those who engage in this type of criminal activity not only stand to defraud public entities, but erode the public’s trust in the competitive bidding process,” said Janice K. Fedarcyk, Assistant Director in Charge of the FBI in New York. “The FBI will continue to work with the Antitrust Division to ensure the integrity of competitive bidding in public finance.”

“This case demonstrates the value of a coordinated approach by multiple agencies and law enforcement authorities,” said Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber. “IRS Criminal Investigation contributed to this joint effort by providing financial investigative expertise to uncover this complex and sophisticated scheme. Professionals, including financial service executives, should know we will devote all resources necessary to bring to justice those who commit financial crimes.”

Murphy is charged with two counts of conspiracy and one count of wire fraud. The fraud conspiracy with which Murphy is charged carries a maximum penalty of five years in prison and a $250,000 fine. The wire fraud charge carries a maximum penalty of 30 years in prison and a $1 million fine. The false bank records conspiracy carries a maximum penalty of five years in prison and a $250,000 fine. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The charges announced today resulted from an ongoing investigation conducted by the Antitrust Division’s New York and Cleveland Field Offices, the FBI and IRS-CI. The division is coordinating its investigation with the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.

To date, a total of 13 individuals and one company have pleaded guilty to charges stemming from the ongoing investigation. In May 2012, a federal jury in the Southern District of New York convicted Dominick Carollo, Steven Goldberg and Peter Grimm of multiple counts involving similar fraud conspiracies after a four-week trial. Three other former executives of a financial institution were indicted on Dec. 9, 2010, for participating in fraud schemes and conspiracies related to the bidding for investment agreements, and are awaiting trial, which is scheduled to begin in Manhattan on July 30, 2012.

Yesterday’s indictment is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-335-8000, the FBI at 212-384-5000 or IRS-CI at 212-436-1761, or visit www.justice.gov/atr/contact/newcase.htm.

 

 

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FORMER NEW YORK EMPLOYEE OF A FINANCIAL INSTITUTION PLEADS
GUILTY FOR HIS ROLE IN FRAUD CONSPIRACY INVOLVING
MUNICIPAL BONDS

WASHINGTON — A former financial institution employee pleaded guilty today for his participation in a conspiracy related to municipal bonds, the Department of Justice announced.

According to the plea proceeding held today in the U.S. District Court in Manhattan, Alexander Wright, a resident of New York City, engaged in a fraud conspiracy in the municipal finance industry. According to court documents, the New York-based financial institution that employed Wright as a vice president of the municipal derivatives marketing group was a provider of investment agreements as well as other municipal finance contracts to public entities. Public entities seek to invest money from a variety of sources, primarily the proceeds of municipal bonds that they issue, to raise money for, among other things, public projects. Public entities typically hire a broker to conduct a competitive bidding process for the award of the investment agreements and often for other municipal finance contracts.

The department said in court documents that from approximately June 12, 2002, until approximately June 20, 2002, Wright participated in a fraud conspiracy with former executives from another financial institution, among others. One of the co-conspirators acted as the broker for a municipal finance contract, which was to be competitively bid. The co-conspirator gave Wright information about the prices or price levels of competitors’ bids, a practice known as a “last look.” The co-conspirator signaled Wright to change his bid to a specific number so that Wright’s employer could make more money. Wright and his co-conspirators represented to the municipal issuer that the bidding process was competitive when, in fact, it was not. The department said that, as a result of the bid manipulation, Wright’s employer won the contract at an artificially inflated price, which, since the issuer paid a higher price for the contract, deprived the municipal issuer of money and property.

“By engaging in non-competitive practices, such as sharing confidential bidding information, the co-conspirators undermined the integrity of the municipal bond market and deprived the bond issuer of a fair and competitive price,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s Criminal Enforcement Program. “Today’s guilty plea demonstrates our continued efforts to hold accountable those who subvert the competitive process in our financial markets.”

The conspiracy to commit wire fraud for which Wright is charged carries a maximum penalty of five years in prison and a $250,000 criminal fine. The maximum fine for this offense may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

“The type of bid-rigging scheme Wright and his co-conspirators participated in not only deprives the municipal issuer of a fair and just bidding process, but weakens the public’s trust in the municipal bond market,” said Janice K. Fedarcyk, Assistant Director in Charge of the FBI in New York. “Today’s guilty plea is proof of our continued determination to root out those whose business practices contribute to the deterioration of healthy competition in the financial markets.”

“This guilty plea is another step in our efforts to clean up the fraudulent practices in the municipal bond market,” said Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber. “IRS Criminal Investigation will continue to provide financial investigative assistance to ensure individuals are held accountable for their criminal behavior.”

The charges announced today resulted from an ongoing investigation conducted by the Antitrust Division’s New York and Chicago Field Offices, the FBI and IRS-CI. The division is coordinating its investigation with the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.

To date, 12 individuals and one company have pleaded guilty to charges stemming from the ongoing investigation. In May 2012, a federal jury in the Southern District of New York convicted Dominick Carollo, Steven Goldberg and Peter Grimm of multiple counts involving similar fraud conspiracies after a four-week trial. Three other former executives of a financial institution were indicted on Dec. 9, 2010, for participating in fraud schemes and conspiracies related to the bidding for investment agreements, and are awaiting trial, which is scheduled to begin in Manhattan on July 30, 2012.

Today’s guilty plea is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-335-8000, the FBI at 212-384-5000 or IRS-CI at 212-436-1761, or visit www.justice.gov/atr/contact/newcase.htm.

 

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OWNER OF INSULATION SERVICE COMPANY PLEADS GUILTY TO MILLION
DOLLAR BID-RIGGING AND FRAUD CONSPIRACIES AT
NEW YORK CITY HOSPITAL

WASHINGTON — The owner of a former New York City insulation service company pleaded guilty today to a three-count indictment charging him with conspiring to rig bids on contracts for re-insulation services to New York Presbyterian Hospital (NYPH), conspiring to defraud the Internal Revenue Service (IRS) and filing a false tax return, the Department of Justice announced.

David Porath pleaded guilty in the U.S. District Court in Manhattan to charges originally filed under seal on Feb. 18, 2010. At the time of the indictment, Porath was living in Israel. He was extradited and returned to the United States on Feb. 16, 2012. According to the indictment, between early 2000 and March 2005, Porath and his co-conspirators engaged in a bid-rigging conspiracy whereby they created the illusion of a competitive bidding process at NYPH by preparing and submitting fictitious, intentionally high bids so that Porath’s company would be awarded the contracts for re-insulation services for having the “low” bid.

“By submitting intentionally high, non-competitive bids, the co-conspirators deceived NYPH and distorted the competitive market,” said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice’s Antitrust Division. “The division will continue to apprehend and bring to justice those who rig bids and thereby deprive the public of the benefits afforded by a truly competitive bidding process.”

The indictment further charged that between October 2000 and February 2005, Porath conspired with Andrzej Gosek, the owner of a Pennsylvania-based asbestos abatement company, and others, to defraud the IRS and to subscribe to false tax returns. Porath gave Gosek checks made out to companies in Brooklyn, purportedly for work done at NYPH by the Brooklyn companies as sub-contractors to Porath’s company. However, the companies had not performed the work. The checks totaled approximately $229,100 in 2000; $1.19 million in 2001; $760,000 in 2002; $50,000 in 2003; and $125,000 in 2004.

The Brooklyn companies cashed the checks and Gosek delivered the cash, less approximately five percent, back to Porath. Based upon these checks to the Brooklyn companies, Porath took false deductions on his company’s and his personal federal tax returns, allowing Porath to fraudulently reduce his taxable income. The indictment also charged Porath with filing a false federal tax return on or about Feb. 17, 2005, which substantially understated his income.

The bid-rigging charge carries a maximum penalty of 10 years in prison and a $1 million fine. The tax fraud conspiracy charge carries a maximum penalty of five years in prison and a $250,000 fine. The false subscription charge carries a maximum penalty of three years in prison and a $100,000 fine. The maximum fine for each of these charges may be increased to twice the gain derived from the crimes or twice the loss suffered by the victims of the crimes, if either of those amounts is greater than the statutory maximum fine.

Including Porath and Gosek, who pleaded guilty in November 2010, 15 individuals and six companies have been convicted of or pleaded guilty to charges arising out of this federal antitrust investigation of bid rigging, fraud, bribery and tax-related offenses relating to the award of contracts by the facilities operations department of NYPH.

The investigation was conducted by the Antitrust Division’s New York Field Office with the assistance of the FBI and the Internal Revenue Service – Criminal Investigation’s New York Field Office. The Office of International Affairs in the Justice Department’s Criminal Division also provided assistance. Anyone with information concerning bid rigging, bribery, tax offenses or fraud related at NYPH should contact the Antitrust Division’s New York Field Office of the at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm, or call the FBI’s New York Division at 212-384-1000.

 

 

 

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TWO INDIVIDUALS SENTENCED TO PRISON FOR PARTICIPATING IN
KICKBACK SCHEME AT NEW YORK PRESBYTERIAN HOSPITAL

A Pennsylvania Company and Two New York Companies Sentenced to Pay a Total of $3 Million in Criminal Fines

WASHINGTON — Two individuals and three corporations were sentenced in the U.S. District Court in Manhattan by Judge George B. Daniels today to serve time in prison and to pay criminal fines for their participation in an eight-year conspiracy involving kickbacks in excess of $2.3 million to defraud New York Presbyterian Hospital (NYPH), the Department of Justice announced. The individuals and the corporations were convicted after a four-week trial in February 2012.

Michael Yaron, the owner of two of the companies convicted for their roles in the conspiracy—Cambridge Environmental & Construction Corp, doing business as National Environmental Associates (Cambridge/NEA) and Oxford Construction & Development Corp.—was sentenced to serve 60 months in jail, and to pay a $500,000 criminal fine. Cambridge/NEA and Oxford Construction were each sentenced to pay a $1 million criminal fine.

Moshe Buchnik, the president of an asbestos abatement company that also did business at NYPH, was sentenced to serve 48 months in jail, and to pay a $500,000 criminal fine for his role in the conspiracy.

Artech Corp., a company owned by a relative of Santo Saglimbeni, a former vice president of facilities operations at NYPH, was also sentenced to pay a $1 million criminal fine.

Two additional charged co-conspirators, Saglimbeni and Emilio “Tony” Figueroa, a former director of facilities operations at NYPH, who were convicted along with Yaron, Buchnick, Cambridge/NEA, Oxford Construction and Artech, are scheduled to appear in court on July 31, 2012.

“The sentences imposed today are consistent with the seriousness of the crimes for which the individuals and companies were found guilty,” said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice’s Antitrust Division. “Today’s sentences hold accountable the unlawful conduct of those involved in illegal kickback conspiracies.”

The department said the scheme to defraud NYPH centered on Saglimbeni, who with the assistance of Figueroa, awarded asbestos abatement, air monitoring and general construction contracts to Yaron, Buchnik and their companies in return for more than $2.3 million in kickbacks. The kickbacks were funneled by Yaron to Saglimbeni through Artech Corp., a sham company Saglimbeni created in his mother’s name in order to conceal the kickbacks.

Yaron, Buchnik, Saglimbeni, Figueroa, Cambridge/ NEA, Oxford Construction and Artech, were each convicted of conspiracy to defraud NYPH. Additionally, Yaron, his companies, Buchnik, Saglimbeni and Artech were also convicted of a substantive wire fraud violation.

The sentences announced today resulted from a federal antitrust investigation of bid rigging, fraud, bribery and tax-related offenses in the award of construction, maintenance and service contracts to the facilities operations department of NYPH. Including today’s sentencings, 14 individuals and six companies have been convicted of or pleaded guilty to charges arising out of this investigation.

The investigation was conducted by the Antitrust Division’s New York Field Office with the assistance of the FBI and the Internal Revenue Service – Criminal Investigation’s New York Field Office. Anyone with information concerning bid rigging, bribery, tax offenses, or fraud at NYPH should contact the Antitrust Division’s New York Field Office of the at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm, or the FBI’s New York Division at 212-384-1000.

 

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THREE FORMER FINANCIAL SERVICES EXECUTIVES CONVICTED FOR ROLES
IN CONSPIRACIES INVOLVING INVESTMENT CONTRACTS FOR THE PROCEEDS
OF MUNICIPAL BONDS

WASHINGTON — A federal jury in New York City today convicted three former financial services executives for their participation in conspiracies related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts, the Department of Justice announced.

Dominick P. Carollo, Steven E. Goldberg and Peter S. Grimm, all former executives of General Electric Co. (GE) affiliates, were found guilty on all remaining counts of a superseding indictment in the U.S. District Court for the Southern District of New York. Carollo was found guilty on two counts of conspiracy to commit wire fraud and defraud the United States, Goldberg was found guilty on four counts of conspiracy to commit wire fraud and defraud the United States and Grimm was found guilty on three counts of conspiracy to commit wire fraud and to defraud the United States.

The trial began on April 16, 2012. Carollo, Goldberg and Grimm were initially indicted on July 27, 2010.

“The defendants corrupted the competitive bidding process and defrauded municipalities across the country for years,” said Deputy Assistant Attorney General Scott D. Hammond of the Antitrust Division. “Through corruption and fraud, they cheated cities and towns out of money for important public works projects. Today’s convictions reflect our determination to preserve fairness and competition in the financial services market. ”

According to evidence presented at trial, while employed at GE affiliates, Carollo, Goldberg and Grimm participated in separate fraud conspiracies with various financial institutions and insurance companies and their representatives at various time periods from as early as 1999 until 2006. These institutions and companies, or “providers,” offered a type of contract, known as an investment agreement, to state, county and local governments and agencies throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Goldberg also participated in the conspiracies while employed at Financial Security Assurance Capital Management Services LLC (FSA).

According to evidence presented at trial, Carollo, Goldberg and Grimm and their co-conspirators corrupted the bidding process for dozens of investment agreements to increase the number and profitability of investment agreements awarded to the provider companies where they were employed. Carollo, Goldberg and Grimm deprived the municipalities of competitive interest rates for the investment of tax-exempt bond proceeds that were to be used by municipalities for various public works projects, such as for building or repairing schools, hospitals and roads. Evidence at trial established that they cost municipalities around the country millions of dollars.

“Fundamentally, this case is about fraud in the investment of public money,” said Janice K. Fedarcyk, Assistant Director in Charge of the FBI in New York. “The actions of the defendants denied public entities the benefits of true competitive bidding, and artificially depressed the yield on invested public funds. ”

“Today’s convictions are an important step forward in the coordinated effort by the IRS and the Department of Justice to aggressively rid the municipal bond industry of unfair and corrupt practices,” said Internal Revenue Service (IRS)-Criminal Investigation (IRS-CI) Special Agent in Charge Victor W. Lessoff. “Moreover, the convictions represent an important victory for America’s taxpayers, especially those who live in the municipalities harmed by the actions of the defendants. ”

A total of eighteen individuals have been charged as a result of the department’s ongoing municipal bonds investigation. Including today’s convictions, a total of 15 individuals have been convicted and three await trial. Additionally, one company has pleaded guilty.

Each of the fraud conspiracy charges carries a maximum penalty per count of five years in prison and a $250,000 fine. The maximum fines for the fraud conspiracy offense may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The verdict announced today resulted from an ongoing investigation conducted by the Antitrust Division’s New York Office, the FBI and the IRS-CI. The division is coordinating its investigation with the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.

Today’s convictions are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force, visit www.StopFraud.gov.

Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-335-8000, the FBI at 212-384-5000 or IRS-CI at 212-436-1761, or visit www.justice.gov/atr/contact/newcase.htm.

 

 

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NEW JERSEY FINANCIAL INVESTOR AND HIS COMPANY PLEAD GUILTY TO
BID RIGGING AT MUNICIPAL TAX LIEN AUCTIONS

WASHINGTON — A financial investor who purchased municipal tax liens at auctions in New Jersey, as well as a company in which he was a partner, pleaded guilty today for their roles in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities throughout the state, the Department of Justice announced.

A felony charge was filed today in the U.S. District Court for the District of New Jersey in Newark, N.J., against David Butler of Cherry Hill, N.J. A charge was also filed against DSBD LLC, a New Jersey company responsible for managing tax lien investments in which Butler had a partnership interest. Under the plea agreements, which are subject to court approval, Butler and DSBD have each agreed to cooperate with the department’s ongoing investigation.

According to the felony charges, from at least as early as the beginning of 2005 until approximately February 2009, Butler and his company participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders on which liens to bid. The department said that both Butler and DSBD proceeded to submit bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.

“The Antitrust Division is committed to holding accountable those who seek to exploit and undermine the competitive process at municipal tax lien auctions,” said Acting Assistant Attorney General Sharis A. Pozen in charge of the Department of Justice’s Antitrust Division. “The division will continue to work with its law enforcement partners to prosecute those who harm our local communities by engaging in this kind of anticompetitive conduct in municipal tax lien auctions.”

The department said that the primary purpose of the conspiracy was to suppress and restrain competition to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.

According to the court documents, Butler and DSBD conspired with others not to bid against one another at municipal tax lien auctions in New Jersey. Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.

Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum penalty for a corporation is a $100 million criminal fine. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the statutory maximum.

Today’s guilty pleas are the eighth and ninth pleas resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. On Aug. 24, 2011, Isadore H. May, Richard J. Pisciotta Jr. and William A. Collins each pleaded guilty to one count of bid rigging in connection with their participation in a conspiracy to allocate liens at New Jersey auctions. On Feb. 23, 2012, Robert W. Stein and David M. Farber also pleaded guilty to conspiring to allocate liens at municipal tax lien auctions in New Jersey. On March 27, 2012, Robert E. Rothman pleaded guilty for his role in a conspiracy to rig bids for the sales of tax liens auctioned by municipalities throughout New Jersey. On April 17, 2012, Stephen E. Hruby also pleaded guilty for his role in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities throughout New Jersey.

Today’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force (FFETF). President Obama established the interagency FFETF to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.

The ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office. Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the FBI’s Atlantic City Resident Agency at 609-677-6400.

 

 

 

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FORMER EXECUTIVE OF NEW YORK-BASED TAX LIENS COMPANY
PLEADS GUILTY TO BID RIGGING AT
MUNICIPAL TAX LIEN AUCTIONS IN NEW JERSEY

WASHINGTON — A former executive of a New York-based tax lienscompany who supervised the purchasing of municipal tax liens at auctions in New Jersey pleaded guilty today for his role in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities throughout the state, the Department of Justice announced.

A felony charge was filed today in the U.S. District Court for the District of New Jersey in Newark, N.J., against former Vice President Stephen E. Hruby, of Hainesport, N.J.  Under the plea agreement, which is subject to court approval, Hruby has agreed to cooperate with the department’s ongoing investigation.

According to the felony charge, from at least as early as December 2002 until approximately February 2009, Hruby participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to, and directing others to, allocate among certain bidders which liens each would bid on.  Hruby, and those under his supervision, proceeded to submit bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.

“Today’s guilty plea demonstrates that the Antitrust Division will not tolerate illegal conduct that harms distressed homeowners,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “The division will continue to prosecute the perpetrators of anticompetitive bid rigging schemes at municipal tax lien auctions in New Jersey and elsewhere.”

The department said that the primary purpose of the conspiracy was to suppress and restrain competition, in order to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates.  When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes.  If the taxes remain unpaid after a waiting period, the lien may be sold at auction.  State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption.  By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent.  If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.

According to the court documents, Hruby conspired with others not to bid against one another at municipal tax lien auctions in New Jersey.  Because the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate.  Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the statutory maximum.

Today’s plea is the seventh guilty plea resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions.  On Aug. 24, 2011, Isadore H. May, Richard J. Pisciotta Jr. and William A. Collins each pleaded guilty to one count of bid rigging in connection with their participation in a conspiracy to allocate liens at New Jersey auctions.  On Feb. 23, 2012, Robert W. Stein and David M. Farber each pleaded guilty to one count of bid rigging.  On March 27, 2012, Robert E. Rothman pleaded guilty to one count of bid rigging in connection with his participation in this conspiracy.

Today’s charge is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force (FFETF).  President Obama established the interagency FFETF to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.  For more information on the task force, visit www.StopFraud.gov.

The ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office.  Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.

 

 

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TWO FINANCIAL INVESTORS PLEAD GUILTY TO BID RIGGING AT
MUNICIPAL TAX LIEN AUCTIONS IN NEW JERSEY

WASHINGTON — Two financial investors who purchased municipal tax liens at auctions in New Jersey pleaded guilty today for conspiring to rig bids for the sale of tax liens auctioned by municipalities throughout the state, the Department of Justice announced.

A felony charge was filed today in U.S. District Court for the District of New Jersey in Newark, N.J., against Robert W. Stein of Huntington Valley, Pa., and David M. Farber of Cherry Hill, N.J. Under the plea agreements, which are subject to court approval, Stein and Farber have both agreed to cooperate with the department’s ongoing investigation.

According to the felony charge against Stein, from as early as 1998 until approximately spring 2009, Stein participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders on which liens to bid. According to the felony charge against Farber, from as early as the beginning of 2005 through approximately February 2009, Farber also participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey. The department said that both Stein and Farber proceeded to submit bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.

“Today’s guilty pleas demonstrate that the Antitrust Division will not tolerate those who manipulate the competitive process in order to harm home and property owners,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.

The department said that the primary purpose of the conspiracies was to suppress and restrain competition to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.

According to the court documents, Stein conspired with others not to bid against one another at municipal tax lien auctions in New Jersey. Farber also agreed not bid against certain bidders at tax lien auctions. Because the conspiracies permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.

Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.

Today’s pleas are the result of an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. On Aug. 24, 2011, Isadore H. May, Richard J. Pisciotta Jr. and William A. Collins each pleaded guilty to one count of bid rigging in connection with their participation in a conspiracy to allocate liens at New Jersey municipal tax lien auctions.

Today’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force (FFETF). President Obama established the interagency FFETF to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.

The ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office. Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.

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FOUR INDIVIDUALS AND THREE CORPORATIONS CONVICTED FOR ROLES IN
WIRE FRAUD CONSPIRACY AT NEW YORK PRESBYTERIAN HOSPITAL

WASHINGTON — A Manhattan jury today convicted four individuals and three corporations for their participation in an eight-year conspiracy, involving kickbacks in excess of $2 million, to defraud New York Presbyterian Hospital (NYPH), the Department of Justice announced. In addition to today’s convictions, previously 10 individuals and three companies have pleaded guilty to date to charges arising out of this investigation.

After a four week trial, Michael Yaron and two companies owned by him, Cambridge Environmental & Construction Corp., which does business as National Environmental Associates (Cambridge/NEA), an asbestos abatement company, and Oxford Construction & Development Corp., a construction company; Moshe Buchnik, the president of two asbestos abatement companies; Santo Saglimbeni, a former vice president of facilities operations at NYPH; Artech Corporation, a company owned by a relative of Saglimbeni; and Emilio “Tony” Figueroa, a former director of facilities operations at NYPH were each convicted of engaging in a wire fraud conspiracy to defraud NYPH. Additionally, Yaron, Cambridge/NEA, Oxford, Buchnik, Saglimbeni and Artech were also convicted of wire fraud for transferring money electronically from the bank account of one co-conspirator to Artech’s bank account.

“We are very pleased that the jury found these individuals and companies guilty of conspiracy to defraud New York Presbyterian Hospital,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Justice Department’s Antitrust Division. “This verdict sends a clear message that corrupt purchasing officials and the contractors who paid them kickbacks will be held accountable for this type of illegal conduct.”

According to the court document, the scheme to defraud NYPH centered on Saglimbeni, with the assistance of Figueroa, awarding asbestos abatement, air monitoring and general construction contracts to Yaron, Buchnik, Cambridge/NEA and Oxford in return for over $2.3 million in kickbacks paid to Saglimbeni. A portion of those kickbacks were funneled by Yaron to Saglimbeni through Artech, a sham company Saglimbeni created in the name of his mother in order to conceal the kickbacks. Counts three and four of the superseding indictment charging Saglimbeni and Figueroa with mail fraud conspiracy and mail fraud were severed from the matter and will be tried on April 16, 2012, in U.S. District Court in Manhattan.

Sentencing for all defendants is scheduled for June 20, 2012, before Judge George B. Daniels. The wire fraud and wire fraud conspiracy charges each carry a maximum penalty of 20 years in prison for individuals and a $1 million criminal fine for individuals and companies. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The convictions announced today resulted from a federal antitrust investigation of bid rigging, fraud, bribery and tax-related offenses in the award of construction, maintenance and service contracts to the facilities operations department of NYPH.

The investigation is being conducted by the Antitrust Division’s New York Field Office with the assistance of the FBI and the Internal Revenue Service-Criminal Investigation’s New York Field Office. Anyone with information concerning bid rigging, bribery, tax offenses or fraud at NYPH should contact the Antitrust Division’s New York Field Office at 212-264-9308, visit www.justice.gov/atr/contact/newcase.htm or contact the FBI’s New York Division at 212-384-1000.

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TUESDAY, JANUARY 17, 2012
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NEW JERSEY PIPE SUPPLY COMPANY AND OWNER SENTENCED FOR THEIR ROLE IN FRAUD AND BRIBERY CONSPIRACY IN POWER GENERATION INDUSTRY

Owner Sentenced to Serve 60 Months in Prison and to Pay a Total of $422,000 in Fines and Restitution; Company Sentenced to Pay a Total of $847,000 in Fines and Restitution

WASHINGTON — A New Jersey industrial pipe supply company and its owner were sentenced today for participating in a conspiracy to commit fraud and pay bribes to a purchasing manager at Consolidated Edison of New York (Con Ed) in return for the manager’s efforts to steer contracts to the company, the Department of Justice announced.

Bernard Grobart of New York City was sentenced in U.S. District Court in Manhattan by Judge Paul G. Gardephe to serve 60 months in prison and to pay a $125,000 criminal fine. Teneyck Inc., formerly known as Neill Supply Co. Inc. of Lyndhurst, N.J., was sentenced to pay a $550,000 criminal fine. Grobart and Teneyck were also sentenced to pay $297,000 in restitution, jointly and severally with their co-conspirators, to the victim, Con Ed. The company and its owner pleaded guilty on March 23, 2011, to participating in a conspiracy to defraud Con Ed from approximately November 2003 through approximately August 2008. Grobart also pleaded guilty to an obstruction count for instructing a subordinate employee at the company to delete an electronic document that was subpoenaed by the government.

According to court documents, Grobart and Robert D. Rosenberg, a former sales broker for Neill Supply, paid approximately $297,000 in cash bribes to James M. Woodason, a department manager of the purchasing department at Con Ed. In return, Woodason steered Con Ed industrial pipe supply contracts to Neill Supply by secretly providing Neill Supply with confidential competitor bid information, thereby causing Con Ed to pay higher, non-competitive prices for materials. According to court documents, Grobart also directed an employee of Neill Supply to destroy an electronic document that tallied the bribe payments in order to prevent the production of the document to a federal grand jury.

Con Ed is a regulated utility headquartered in Manhattan. It provides electric service to approximately 3.2 million customers and gas service to approximately 1.1 million customers in New York City and Westchester County, N.Y. Con Ed received more than $10,000 in federal funding each year between 2003 through 2010. Con Ed cooperated with the department’s investigation.

Including Grobart and Neill Supply, a total of four individuals and two companies have been charged as part of this investigation. On Dec. 9, 2011, Woodason was sentenced in U.S. District Court in Manhattan by Judge Denise L. Cote to serve 70 months in prison, to pay a $12,500 criminal fine and to pay approximately $528,000 in restitution, jointly and severally with his co-conspirators, to Con Ed. The remaining defendants are awaiting sentencing.

The charges arose from an ongoing federal antitrust investigation of bid rigging, bribery, fraud and tax-related offenses in the power generation industry. The investigation is being conducted by the Antitrust Division’s New York Field Office, with the assistance of the FBI and the Internal Revenue Service-Criminal Investigation. Anyone with information concerning bid rigging, bribery, tax offenses or fraud in the power generation industry should contact the FBI’s New York Division at 212-384-3720 or the Antitrust Division’s New York Field Office at 212-335-8000, or visit www.justice.gov/atr/contact/newcase.htm.

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MONDAY, JANUARY 9, 2012
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CDR FINANCIAL PRODUCTS EXECUTIVE AND FORMER EXECUTIVE PLEAD GUILTY IN NEW YORK TO BID-RIGGING AND FRAUD CONSPIRACIES RELATED TO MUNICIPAL BOND INVESTMENTS

WASHINGTON — An executive and a former executive of Rubin/Chambers, Dunhill Insurance Services, also known as CDR Financial Products, pleaded guilty today in the Southern District of New York for their participation in bid-rigging and fraud conspiracies related to contracts for the investment of municipal bond proceeds and other related municipal finance contracts, the Department of Justice announced.

Zevi Wolmark, also known as Stewart Wolmark, the former chief financial officer and managing director of CDR, and Evan Andrew Zarefsky, a CDR vice president, pleaded guilty before U.S. District Judge Victor Marrero. CDR is a Beverly Hills, Calif.-based financial products and services firm. Wolmark and Zarefsky, together with CDR and its founder and president, David Rubin, were indicted on Oct. 29, 2009. Rubin and CDR pleaded guilty on Dec. 30, 2011.

Wolmark and Zarefsky each pleaded guilty to participating in separate bid-rigging and fraud conspiracies with various financial institutions and insurance companies and their representatives. These institutions and companies, or “providers,” offered a type of contract, known as an investment agreement, to state, county and local governments and agencies throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Wolmark and Zarefsky also pleaded guilty to one count of wire fraud in connection with those schemes.

“Through corruption and bid rigging, Zevi Wolmark and Evan Zarefsky reaped profits for their company by defrauding municipalities and denying them the competition they deserved,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Justice Department’s Antitrust Division. “Our investigation into the municipal bond derivatives industry has now led to guilty pleas by 12 financial executives and charges against six others.”

According to court documents, CDR was hired by public entities that issue municipal bonds to act as their broker and conduct what was supposed to be a competitive bidding process for contracts for the investment of municipal bond proceeds. Competitive bidding for those contracts is the subject of regulations issued by the U.S. Department of the Treasury and is related to the tax-exempt status of the bonds.

During his plea, Wolmark admitted that, from 1998 until 2006, he and other co-conspirators favored certain providers when determining which provider would win contracts for investment agreements. Wolmark also admitted that he ensured that certain providers won by soliciting intentionally losing bids from other providers and manipulated bidding in return for unearned or inflated fees. Additionally, Wolmark admitted that he signed certifications that contained false statements regarding whether the bidding process for certain investment agreements complied with relevant Treasury regulations.

Zarefsky admitted that he supplied information to providers to help them win bids, allowed providers to lower their bids and solicited intentionally losing bids from some providers so that other providers could win certain contracts.

“Municipal bonds are issued to fund public works or otherwise serve a public purpose,” said FBI Assistant Director-in-Charge Janice K. Fedarcyk of the New York Field Office. “Bid rigging in the investment of bond proceeds effectively reduces the potential yield on those proceeds, meaning the actions of these defendants had an adverse impact on the public. This wasn’t just self-interest. It was self-interest that ran directly counter to the public interest.”

“Today’s guilty pleas by Zevi Wolmark and Evan Zarefsky represent a milestone in the government’s investigation,” said Special Agent in Charge Charles R. Pine of the Internal Revenue Service-Criminal Investigation (IRS-CI) New York Field Office. “CDR and the firm’s employees have effectively been removed from the municipal bond market and will no longer be able to manipulate and control the bid process for the reinvestment of tax-exempt municipal bond proceeds. This scheme to conceal kickbacks through complex derivative transactions has come to an end. IRS Criminal Investigation will continue to investigate those who violate the law for financial gain at the expense of taxpayers.”

The bid–rigging conspiracy with which Wolmark and Zarefsky are charged carries a maximum penalty of 10 years in prison and a $1 million criminal fine. The fraud conspiracy with which they are charged carries a maximum penalty of five years in prison and a $250,000 criminal fine. The wire fraud charge with which each defendant is charged carries a maximum penalty of 20 years in prison and a $250,000 criminal fine. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Including today’s guilty pleas, 12 individuals have pleaded guilty in an ongoing federal investigation into the municipal bonds industry, which is being conducted by the Antitrust Division’s New York Field Office, the FBI and IRS-CI.

In addition, Dominick Carollo and Peter S. Grimm, formerly of GE Funding Capital Market Services, and Steven E. Goldberg, formerly of GE Funding Capital Market Services and FSA, were indicted on July 27, 2010, and are scheduled to begin trial in April 2012. Three former UBS employees, Peter Ghavami, Gary Heinz and Michael Welty, were indicted on Dec. 9, 2010.

Today’s guilty pleas are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force, visit www.stopfraud.gov.

Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-335-8000, the FBI at 212-384-5000 or IRS-CI at 212-436-1761, or visit www.justice.gov/atr/contact/newcase.htm.

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FOR IMMEDIATE RELEASE
TUESDAY, JULY 31, 2012
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TWO FORMER HOSPITAL EMPLOYEES PLEAD GUILTY TO PARTICIPATING IN KICKBACK SCHEME AT NEW YORK CITY HOSPITAL

WASHINGTON — Two former high-ranking employees of facilities operations at New York Presbyterian Hospital (NYPH) pleaded guilty today to an indictment charging them with conspiring to defraud NYPH, the Department of Justice announced.

Former vice president of facilities operations, Santo Saglimbeni, and former director of facilities operations, Emilio “Tony” Figueroa, were charged in a four-count superseding indictment filed on June 16, 2011.  Saglimbeni, who was charged on all four counts, was convicted of counts one and two on Feb. 2, 2012.  Figueroa, who was charged on counts one, three and four, was convicted on count one on Feb. 2, 2012.  Counts three and four were severed from that indictment, and Saglimbeni and Figueroa pleaded guilty in the U.S. District Court in Manhattan to those counts today.

Saglimbeni and Figueroa pleaded guilty today for their participation in a mail fraud conspiracy, which lasted from as early as June 2001 and continued through June 2006.  The scheme to defraud NYPH centered on Saglimbeni, who with the assistance of Figueroa, awarded contracts for the installation and repair of heating, ventilation and air conditioning systems (HVAC), to a co-conspirator’s company in return for kickbacks given to Saglimbeni and Figueroa in the form of cash, goods and services from that co-conspirator.  Saglimbeni and Figueroa also pleaded guilty to a substantive mail fraud offense based upon a payment made to the co-conspirator by NYPH on an HVAC contract awarded in furtherance of the HVAC conspiracy.

“By awarding contracts in return for kickbacks, Saglimbeni and Figueroa used their positions to subvert the competitive bidding process for essential services at NYPH,” said Joseph Wayland, Acting Assistant Attorney General in charge of the Justice Department’s Antitrust Division.  “Today’s guilty pleas demonstrate the Antitrust Division’s commitment to holding purchasing officials accountable for this type of illegal conduct.”

On Feb. 2, 2012, after a four week trial, Saglimbeni and Figueroa were convicted of the first two counts of the indictment.  At the trial, Michael Yaron and two companies owned by him, Cambridge Environmental & Construction Corp., which does business as National Environmental Associates (Cambridge/NEA), an asbestos abatement company, and Oxford Construction & Development Corp., a construction company; Moshe Buchnik, the president of two asbestos abatement companies; and Artech Corporation, a company owned by a relative of Saglimbeni, were also convicted of conspiracy to defraud NYPH.  Yaron, his companies, Buchnik, Saglimbeni and Artech were also convicted of a substantive wire fraud violation.

These convictions centered on a scheme to defraud NYPH, whereby Saglimbeni, who with the assistance of Figueroa, awarded asbestos abatement, air monitoring and general construction contracts to Yaron, Buchnik and their companies in return for more than $2.3 million in kickbacks paid to Saglimbeni.  Those kickbacks were funneled by Yaron to Saglimbeni through Artech, a sham company Saglimbeni created in the name of his mother.

Each count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine of $250,000 for individuals.  The fine may be increased to twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime by the conspirators.

Including today’s pleas, 15 individuals and six companies have been convicted or pleaded guilty to charges arising out of this federal antitrust investigation.  On July 10, 2012, Yaron was sentenced to serve 60 months in jail and Buchnik was sentenced to serve 48 months.  Each was sentenced to pay a $500,000 criminal fine. Cambridge/NEA, Oxford and Artech, were each sentenced to pay a $1 million criminal fine.

The investigation was conducted by the Antitrust Division’s New York Field Office with the assistance of the FBI and the Internal Revenue Service – Criminal Investigation’s New York Field Office.  The Office of the International Affairs in the Justice Department’s Criminal Division also provided assistance.  Anyone with information concerning bid rigging, bribery, tax offenses or fraud related to NYPH should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm, or call the FBI’s New York Division at 212-384-1000.

 

 

 

 

FOR IMMEDIATE RELEASE
FRIDAY, JULY 20, 2012
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FORMER FINANCIAL SERVICES EXECUTIVE INDICTED FOR HIS
PARTICIPATION IN A FAR-REACHING CONSPIRACY AND SCHEME TO
DEFRAUD INVOLVING INVESTMENT CONTRACTS FOR THE PROCEEDS OF
MUNICIPAL BONDS

WASHINGTON — A former financial services executive was indicted yesterday for his participation in a far-reaching conspiracy and scheme to defraud related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts, the Department of Justice announced.

The three-count indictment was filed yesterday in the U.S. District Court in Charlotte, N.C. The indictment charges Phillip D. Murphy, a former executive for a financial institution, with participating in a wire fraud scheme and separate fraud conspiracies from as early as 1998 until 2006.

The charged conspiracies and scheme to defraud relate to the provision of a type of contract, known as an investment agreement, to public entities, such as state, county and local governments and agencies throughout the United States. Major financial institutions, including banks, investment banks, insurance companies and financial services companies, are among the providers of investment agreements and other related municipal finance contracts. Public entities seek to invest money from a variety of sources, primarily the proceeds of municipal bonds that they issue to raise money for, among other things, public projects. Public entities typically hire a broker to conduct a competitive bidding process among various providers for the award of an investment agreement to invest such money. Competitive bidding for these agreements is the subject of regulations issued by the U.S. Department of the Treasury and is related to the tax-exempt status of the bonds. The company that employed Murphy marketed financial products and services, including services as a provider of investment agreements.

“The individual charged yesterday allegedly participated in a complex fraud scheme and conspiracies to manipulate what was supposed to be a competitive process,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s Criminal Enforcement Program. “The division recently convicted at trial several individuals in this investigation, which is ongoing. We will continue to prosecute those who engage in such illegal and anticompetitive behavior.”

The indictment charges that Murphy conspired with Rubin/Chambers, Dunhill Insurance Services Inc., also known as CDR Financial Products (CDR), a broker of municipal finance contracts, and others to increase the number and profitability of investment agreements and other municipal finance contracts awarded to the provider company where Murphy was employed. Murphy won investment agreements through CDR’s manipulation of the bidding process in obtaining losing bids from other providers, which is explicitly prohibited by U.S. Treasury regulations. As a result of the information, various providers won investment agreements and other municipal finance contracts at artificially determined prices. In exchange for this information, Murphy submitted intentionally losing bids for certain investment agreements and other contracts when requested, and, on occasion, agreed to pay or arranged for kickbacks to be paid to CDR and other co-conspirator brokers.

The indictment also alleges that Murphy and co-conspirators misrepresented to municipal issuers or bond counsel that the bidding process was in compliance with U.S. Treasury regulations. This caused the municipal issuers to award investment agreements and other municipal finance contracts to providers that otherwise would not have been awarded the contracts if the issuers had true and accurate information regarding the bidding process. Such conduct placed the tax-exempt status of the underlying bonds in jeopardy.

According to court documents, the efforts by Murphy and his co-conspirators to control and manipulate the bidding for investment contracts, and the execution of a variety of certifications that covered up their scheme, also obstructed the Internal Revenue Service (IRS)’s ability to monitor compliance with U.S. Treasury regulations and impeded the IRS’s ability to determine whether municipal issuers had correctly accounted for any money that was owed to the U.S. Treasury.

In a separate count, the indictment charges that Murphy conspired with others to falsify bank records related to marketing profits so that the co-conspirators could pay the kickbacks to CDR and others.

“Yesterday’s charges outline a fraudulent scheme to subvert competition in the marketplace. Those who engage in this type of criminal activity not only stand to defraud public entities, but erode the public’s trust in the competitive bidding process,” said Janice K. Fedarcyk, Assistant Director in Charge of the FBI in New York. “The FBI will continue to work with the Antitrust Division to ensure the integrity of competitive bidding in public finance.”

“This case demonstrates the value of a coordinated approach by multiple agencies and law enforcement authorities,” said Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber. “IRS Criminal Investigation contributed to this joint effort by providing financial investigative expertise to uncover this complex and sophisticated scheme. Professionals, including financial service executives, should know we will devote all resources necessary to bring to justice those who commit financial crimes.”

Murphy is charged with two counts of conspiracy and one count of wire fraud. The fraud conspiracy with which Murphy is charged carries a maximum penalty of five years in prison and a $250,000 fine. The wire fraud charge carries a maximum penalty of 30 years in prison and a $1 million fine. The false bank records conspiracy carries a maximum penalty of five years in prison and a $250,000 fine. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The charges announced today resulted from an ongoing investigation conducted by the Antitrust Division’s New York and Cleveland Field Offices, the FBI and IRS-CI. The division is coordinating its investigation with the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.

To date, a total of 13 individuals and one company have pleaded guilty to charges stemming from the ongoing investigation. In May 2012, a federal jury in the Southern District of New York convicted Dominick Carollo, Steven Goldberg and Peter Grimm of multiple counts involving similar fraud conspiracies after a four-week trial. Three other former executives of a financial institution were indicted on Dec. 9, 2010, for participating in fraud schemes and conspiracies related to the bidding for investment agreements, and are awaiting trial, which is scheduled to begin in Manhattan on July 30, 2012.

Yesterday’s indictment is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-335-8000, the FBI at 212-384-5000 or IRS-CI at 212-436-1761, or visit www.justice.gov/atr/contact/newcase.htm.

 

 

FOR IMMEDIATE RELEASE
WEDNESDAY, JULY 18, 2012
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FORMER NEW YORK EMPLOYEE OF A FINANCIAL INSTITUTION PLEADS
GUILTY FOR HIS ROLE IN FRAUD CONSPIRACY INVOLVING
MUNICIPAL BONDS

WASHINGTON — A former financial institution employee pleaded guilty today for his participation in a conspiracy related to municipal bonds, the Department of Justice announced.

According to the plea proceeding held today in the U.S. District Court in Manhattan, Alexander Wright, a resident of New York City, engaged in a fraud conspiracy in the municipal finance industry. According to court documents, the New York-based financial institution that employed Wright as a vice president of the municipal derivatives marketing group was a provider of investment agreements as well as other municipal finance contracts to public entities. Public entities seek to invest money from a variety of sources, primarily the proceeds of municipal bonds that they issue, to raise money for, among other things, public projects. Public entities typically hire a broker to conduct a competitive bidding process for the award of the investment agreements and often for other municipal finance contracts.

The department said in court documents that from approximately June 12, 2002, until approximately June 20, 2002, Wright participated in a fraud conspiracy with former executives from another financial institution, among others. One of the co-conspirators acted as the broker for a municipal finance contract, which was to be competitively bid. The co-conspirator gave Wright information about the prices or price levels of competitors’ bids, a practice known as a “last look.” The co-conspirator signaled Wright to change his bid to a specific number so that Wright’s employer could make more money. Wright and his co-conspirators represented to the municipal issuer that the bidding process was competitive when, in fact, it was not. The department said that, as a result of the bid manipulation, Wright’s employer won the contract at an artificially inflated price, which, since the issuer paid a higher price for the contract, deprived the municipal issuer of money and property.

“By engaging in non-competitive practices, such as sharing confidential bidding information, the co-conspirators undermined the integrity of the municipal bond market and deprived the bond issuer of a fair and competitive price,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s Criminal Enforcement Program. “Today’s guilty plea demonstrates our continued efforts to hold accountable those who subvert the competitive process in our financial markets.”

The conspiracy to commit wire fraud for which Wright is charged carries a maximum penalty of five years in prison and a $250,000 criminal fine. The maximum fine for this offense may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

“The type of bid-rigging scheme Wright and his co-conspirators participated in not only deprives the municipal issuer of a fair and just bidding process, but weakens the public’s trust in the municipal bond market,” said Janice K. Fedarcyk, Assistant Director in Charge of the FBI in New York. “Today’s guilty plea is proof of our continued determination to root out those whose business practices contribute to the deterioration of healthy competition in the financial markets.”

“This guilty plea is another step in our efforts to clean up the fraudulent practices in the municipal bond market,” said Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber. “IRS Criminal Investigation will continue to provide financial investigative assistance to ensure individuals are held accountable for their criminal behavior.”

The charges announced today resulted from an ongoing investigation conducted by the Antitrust Division’s New York and Chicago Field Offices, the FBI and IRS-CI. The division is coordinating its investigation with the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.

To date, 12 individuals and one company have pleaded guilty to charges stemming from the ongoing investigation. In May 2012, a federal jury in the Southern District of New York convicted Dominick Carollo, Steven Goldberg and Peter Grimm of multiple counts involving similar fraud conspiracies after a four-week trial. Three other former executives of a financial institution were indicted on Dec. 9, 2010, for participating in fraud schemes and conspiracies related to the bidding for investment agreements, and are awaiting trial, which is scheduled to begin in Manhattan on July 30, 2012.

Today’s guilty plea is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-335-8000, the FBI at 212-384-5000 or IRS-CI at 212-436-1761, or visit www.justice.gov/atr/contact/newcase.htm.

 

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WEDNESDAY, JULY 11, 2012
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OWNER OF INSULATION SERVICE COMPANY PLEADS GUILTY TO MILLION
DOLLAR BID-RIGGING AND FRAUD CONSPIRACIES AT
NEW YORK CITY HOSPITAL

WASHINGTON — The owner of a former New York City insulation service company pleaded guilty today to a three-count indictment charging him with conspiring to rig bids on contracts for re-insulation services to New York Presbyterian Hospital (NYPH), conspiring to defraud the Internal Revenue Service (IRS) and filing a false tax return, the Department of Justice announced.

David Porath pleaded guilty in the U.S. District Court in Manhattan to charges originally filed under seal on Feb. 18, 2010. At the time of the indictment, Porath was living in Israel. He was extradited and returned to the United States on Feb. 16, 2012. According to the indictment, between early 2000 and March 2005, Porath and his co-conspirators engaged in a bid-rigging conspiracy whereby they created the illusion of a competitive bidding process at NYPH by preparing and submitting fictitious, intentionally high bids so that Porath’s company would be awarded the contracts for re-insulation services for having the “low” bid.

“By submitting intentionally high, non-competitive bids, the co-conspirators deceived NYPH and distorted the competitive market,” said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice’s Antitrust Division. “The division will continue to apprehend and bring to justice those who rig bids and thereby deprive the public of the benefits afforded by a truly competitive bidding process.”

The indictment further charged that between October 2000 and February 2005, Porath conspired with Andrzej Gosek, the owner of a Pennsylvania-based asbestos abatement company, and others, to defraud the IRS and to subscribe to false tax returns. Porath gave Gosek checks made out to companies in Brooklyn, purportedly for work done at NYPH by the Brooklyn companies as sub-contractors to Porath’s company. However, the companies had not performed the work. The checks totaled approximately $229,100 in 2000; $1.19 million in 2001; $760,000 in 2002; $50,000 in 2003; and $125,000 in 2004.

The Brooklyn companies cashed the checks and Gosek delivered the cash, less approximately five percent, back to Porath. Based upon these checks to the Brooklyn companies, Porath took false deductions on his company’s and his personal federal tax returns, allowing Porath to fraudulently reduce his taxable income. The indictment also charged Porath with filing a false federal tax return on or about Feb. 17, 2005, which substantially understated his income.

The bid-rigging charge carries a maximum penalty of 10 years in prison and a $1 million fine. The tax fraud conspiracy charge carries a maximum penalty of five years in prison and a $250,000 fine. The false subscription charge carries a maximum penalty of three years in prison and a $100,000 fine. The maximum fine for each of these charges may be increased to twice the gain derived from the crimes or twice the loss suffered by the victims of the crimes, if either of those amounts is greater than the statutory maximum fine.

Including Porath and Gosek, who pleaded guilty in November 2010, 15 individuals and six companies have been convicted of or pleaded guilty to charges arising out of this federal antitrust investigation of bid rigging, fraud, bribery and tax-related offenses relating to the award of contracts by the facilities operations department of NYPH.

The investigation was conducted by the Antitrust Division’s New York Field Office with the assistance of the FBI and the Internal Revenue Service – Criminal Investigation’s New York Field Office. The Office of International Affairs in the Justice Department’s Criminal Division also provided assistance. Anyone with information concerning bid rigging, bribery, tax offenses or fraud related at NYPH should contact the Antitrust Division’s New York Field Office of the at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm, or call the FBI’s New York Division at 212-384-1000.

 

 

 

FOR IMMEDIATE RELEASE
TUESDAY, JULY 10, 2012
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TWO INDIVIDUALS SENTENCED TO PRISON FOR PARTICIPATING IN
KICKBACK SCHEME AT NEW YORK PRESBYTERIAN HOSPITAL

A Pennsylvania Company and Two New York Companies Sentenced to Pay a Total of $3 Million in Criminal Fines

WASHINGTON — Two individuals and three corporations were sentenced in the U.S. District Court in Manhattan by Judge George B. Daniels today to serve time in prison and to pay criminal fines for their participation in an eight-year conspiracy involving kickbacks in excess of $2.3 million to defraud New York Presbyterian Hospital (NYPH), the Department of Justice announced. The individuals and the corporations were convicted after a four-week trial in February 2012.

Michael Yaron, the owner of two of the companies convicted for their roles in the conspiracy—Cambridge Environmental & Construction Corp, doing business as National Environmental Associates (Cambridge/NEA) and Oxford Construction & Development Corp.—was sentenced to serve 60 months in jail, and to pay a $500,000 criminal fine. Cambridge/NEA and Oxford Construction were each sentenced to pay a $1 million criminal fine.

Moshe Buchnik, the president of an asbestos abatement company that also did business at NYPH, was sentenced to serve 48 months in jail, and to pay a $500,000 criminal fine for his role in the conspiracy.

Artech Corp., a company owned by a relative of Santo Saglimbeni, a former vice president of facilities operations at NYPH, was also sentenced to pay a $1 million criminal fine.

Two additional charged co-conspirators, Saglimbeni and Emilio “Tony” Figueroa, a former director of facilities operations at NYPH, who were convicted along with Yaron, Buchnick, Cambridge/NEA, Oxford Construction and Artech, are scheduled to appear in court on July 31, 2012.

“The sentences imposed today are consistent with the seriousness of the crimes for which the individuals and companies were found guilty,” said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice’s Antitrust Division. “Today’s sentences hold accountable the unlawful conduct of those involved in illegal kickback conspiracies.”

The department said the scheme to defraud NYPH centered on Saglimbeni, who with the assistance of Figueroa, awarded asbestos abatement, air monitoring and general construction contracts to Yaron, Buchnik and their companies in return for more than $2.3 million in kickbacks. The kickbacks were funneled by Yaron to Saglimbeni through Artech Corp., a sham company Saglimbeni created in his mother’s name in order to conceal the kickbacks.

Yaron, Buchnik, Saglimbeni, Figueroa, Cambridge/ NEA, Oxford Construction and Artech, were each convicted of conspiracy to defraud NYPH. Additionally, Yaron, his companies, Buchnik, Saglimbeni and Artech were also convicted of a substantive wire fraud violation.

The sentences announced today resulted from a federal antitrust investigation of bid rigging, fraud, bribery and tax-related offenses in the award of construction, maintenance and service contracts to the facilities operations department of NYPH. Including today’s sentencings, 14 individuals and six companies have been convicted of or pleaded guilty to charges arising out of this investigation.

The investigation was conducted by the Antitrust Division’s New York Field Office with the assistance of the FBI and the Internal Revenue Service – Criminal Investigation’s New York Field Office. Anyone with information concerning bid rigging, bribery, tax offenses, or fraud at NYPH should contact the Antitrust Division’s New York Field Office of the at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm, or the FBI’s New York Division at 212-384-1000.

 

FOR IMMEDIATE RELEASE
FRIDAY, MAY 11, 2012
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THREE FORMER FINANCIAL SERVICES EXECUTIVES CONVICTED FOR ROLES
IN CONSPIRACIES INVOLVING INVESTMENT CONTRACTS FOR THE PROCEEDS
OF MUNICIPAL BONDS

WASHINGTON — A federal jury in New York City today convicted three former financial services executives for their participation in conspiracies related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts, the Department of Justice announced.

Dominick P. Carollo, Steven E. Goldberg and Peter S. Grimm, all former executives of General Electric Co. (GE) affiliates, were found guilty on all remaining counts of a superseding indictment in the U.S. District Court for the Southern District of New York. Carollo was found guilty on two counts of conspiracy to commit wire fraud and defraud the United States, Goldberg was found guilty on four counts of conspiracy to commit wire fraud and defraud the United States and Grimm was found guilty on three counts of conspiracy to commit wire fraud and to defraud the United States.

The trial began on April 16, 2012. Carollo, Goldberg and Grimm were initially indicted on July 27, 2010.

“The defendants corrupted the competitive bidding process and defrauded municipalities across the country for years,” said Deputy Assistant Attorney General Scott D. Hammond of the Antitrust Division. “Through corruption and fraud, they cheated cities and towns out of money for important public works projects. Today’s convictions reflect our determination to preserve fairness and competition in the financial services market. ”

According to evidence presented at trial, while employed at GE affiliates, Carollo, Goldberg and Grimm participated in separate fraud conspiracies with various financial institutions and insurance companies and their representatives at various time periods from as early as 1999 until 2006. These institutions and companies, or “providers,” offered a type of contract, known as an investment agreement, to state, county and local governments and agencies throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Goldberg also participated in the conspiracies while employed at Financial Security Assurance Capital Management Services LLC (FSA).

According to evidence presented at trial, Carollo, Goldberg and Grimm and their co-conspirators corrupted the bidding process for dozens of investment agreements to increase the number and profitability of investment agreements awarded to the provider companies where they were employed. Carollo, Goldberg and Grimm deprived the municipalities of competitive interest rates for the investment of tax-exempt bond proceeds that were to be used by municipalities for various public works projects, such as for building or repairing schools, hospitals and roads. Evidence at trial established that they cost municipalities around the country millions of dollars.

“Fundamentally, this case is about fraud in the investment of public money,” said Janice K. Fedarcyk, Assistant Director in Charge of the FBI in New York. “The actions of the defendants denied public entities the benefits of true competitive bidding, and artificially depressed the yield on invested public funds. ”

“Today’s convictions are an important step forward in the coordinated effort by the IRS and the Department of Justice to aggressively rid the municipal bond industry of unfair and corrupt practices,” said Internal Revenue Service (IRS)-Criminal Investigation (IRS-CI) Special Agent in Charge Victor W. Lessoff. “Moreover, the convictions represent an important victory for America’s taxpayers, especially those who live in the municipalities harmed by the actions of the defendants. ”

A total of eighteen individuals have been charged as a result of the department’s ongoing municipal bonds investigation. Including today’s convictions, a total of 15 individuals have been convicted and three await trial. Additionally, one company has pleaded guilty.

Each of the fraud conspiracy charges carries a maximum penalty per count of five years in prison and a $250,000 fine. The maximum fines for the fraud conspiracy offense may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The verdict announced today resulted from an ongoing investigation conducted by the Antitrust Division’s New York Office, the FBI and the IRS-CI. The division is coordinating its investigation with the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.

Today’s convictions are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force, visit www.StopFraud.gov.

Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-335-8000, the FBI at 212-384-5000 or IRS-CI at 212-436-1761, or visit www.justice.gov/atr/contact/newcase.htm.

 

 

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MONDAY, APRIL 23, 2012
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NEW JERSEY FINANCIAL INVESTOR AND HIS COMPANY PLEAD GUILTY TO
BID RIGGING AT MUNICIPAL TAX LIEN AUCTIONS

WASHINGTON — A financial investor who purchased municipal tax liens at auctions in New Jersey, as well as a company in which he was a partner, pleaded guilty today for their roles in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities throughout the state, the Department of Justice announced.

A felony charge was filed today in the U.S. District Court for the District of New Jersey in Newark, N.J., against David Butler of Cherry Hill, N.J. A charge was also filed against DSBD LLC, a New Jersey company responsible for managing tax lien investments in which Butler had a partnership interest. Under the plea agreements, which are subject to court approval, Butler and DSBD have each agreed to cooperate with the department’s ongoing investigation.

According to the felony charges, from at least as early as the beginning of 2005 until approximately February 2009, Butler and his company participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders on which liens to bid. The department said that both Butler and DSBD proceeded to submit bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.

“The Antitrust Division is committed to holding accountable those who seek to exploit and undermine the competitive process at municipal tax lien auctions,” said Acting Assistant Attorney General Sharis A. Pozen in charge of the Department of Justice’s Antitrust Division. “The division will continue to work with its law enforcement partners to prosecute those who harm our local communities by engaging in this kind of anticompetitive conduct in municipal tax lien auctions.”

The department said that the primary purpose of the conspiracy was to suppress and restrain competition to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.

According to the court documents, Butler and DSBD conspired with others not to bid against one another at municipal tax lien auctions in New Jersey. Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.

Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum penalty for a corporation is a $100 million criminal fine. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the statutory maximum.

Today’s guilty pleas are the eighth and ninth pleas resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. On Aug. 24, 2011, Isadore H. May, Richard J. Pisciotta Jr. and William A. Collins each pleaded guilty to one count of bid rigging in connection with their participation in a conspiracy to allocate liens at New Jersey auctions. On Feb. 23, 2012, Robert W. Stein and David M. Farber also pleaded guilty to conspiring to allocate liens at municipal tax lien auctions in New Jersey. On March 27, 2012, Robert E. Rothman pleaded guilty for his role in a conspiracy to rig bids for the sales of tax liens auctioned by municipalities throughout New Jersey. On April 17, 2012, Stephen E. Hruby also pleaded guilty for his role in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities throughout New Jersey.

Today’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force (FFETF). President Obama established the interagency FFETF to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.

The ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office. Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the FBI’s Atlantic City Resident Agency at 609-677-6400.

 

 

 

FOR IMMEDIATE RELEASE
TUESDAY, APRIL 17, 2012
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FORMER EXECUTIVE OF NEW YORK-BASED TAX LIENS COMPANY
PLEADS GUILTY TO BID RIGGING AT
MUNICIPAL TAX LIEN AUCTIONS IN NEW JERSEY

WASHINGTON — A former executive of a New York-based tax lienscompany who supervised the purchasing of municipal tax liens at auctions in New Jersey pleaded guilty today for his role in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities throughout the state, the Department of Justice announced.

A felony charge was filed today in the U.S. District Court for the District of New Jersey in Newark, N.J., against former Vice President Stephen E. Hruby, of Hainesport, N.J.  Under the plea agreement, which is subject to court approval, Hruby has agreed to cooperate with the department’s ongoing investigation.

According to the felony charge, from at least as early as December 2002 until approximately February 2009, Hruby participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to, and directing others to, allocate among certain bidders which liens each would bid on.  Hruby, and those under his supervision, proceeded to submit bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.

“Today’s guilty plea demonstrates that the Antitrust Division will not tolerate illegal conduct that harms distressed homeowners,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “The division will continue to prosecute the perpetrators of anticompetitive bid rigging schemes at municipal tax lien auctions in New Jersey and elsewhere.”

The department said that the primary purpose of the conspiracy was to suppress and restrain competition, in order to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates.  When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes.  If the taxes remain unpaid after a waiting period, the lien may be sold at auction.  State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption.  By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent.  If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.

According to the court documents, Hruby conspired with others not to bid against one another at municipal tax lien auctions in New Jersey.  Because the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate.  Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the statutory maximum.

Today’s plea is the seventh guilty plea resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions.  On Aug. 24, 2011, Isadore H. May, Richard J. Pisciotta Jr. and William A. Collins each pleaded guilty to one count of bid rigging in connection with their participation in a conspiracy to allocate liens at New Jersey auctions.  On Feb. 23, 2012, Robert W. Stein and David M. Farber each pleaded guilty to one count of bid rigging.  On March 27, 2012, Robert E. Rothman pleaded guilty to one count of bid rigging in connection with his participation in this conspiracy.

Today’s charge is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force (FFETF).  President Obama established the interagency FFETF to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.  For more information on the task force, visit www.StopFraud.gov.

The ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office.  Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.

 

 

FOR IMMEDIATE RELEASE
THURSDAY, FEBRUARY 23, 2012
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TWO FINANCIAL INVESTORS PLEAD GUILTY TO BID RIGGING AT
MUNICIPAL TAX LIEN AUCTIONS IN NEW JERSEY

WASHINGTON — Two financial investors who purchased municipal tax liens at auctions in New Jersey pleaded guilty today for conspiring to rig bids for the sale of tax liens auctioned by municipalities throughout the state, the Department of Justice announced.

A felony charge was filed today in U.S. District Court for the District of New Jersey in Newark, N.J., against Robert W. Stein of Huntington Valley, Pa., and David M. Farber of Cherry Hill, N.J. Under the plea agreements, which are subject to court approval, Stein and Farber have both agreed to cooperate with the department’s ongoing investigation.

According to the felony charge against Stein, from as early as 1998 until approximately spring 2009, Stein participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders on which liens to bid. According to the felony charge against Farber, from as early as the beginning of 2005 through approximately February 2009, Farber also participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey. The department said that both Stein and Farber proceeded to submit bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.

“Today’s guilty pleas demonstrate that the Antitrust Division will not tolerate those who manipulate the competitive process in order to harm home and property owners,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.

The department said that the primary purpose of the conspiracies was to suppress and restrain competition to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.

According to the court documents, Stein conspired with others not to bid against one another at municipal tax lien auctions in New Jersey. Farber also agreed not bid against certain bidders at tax lien auctions. Because the conspiracies permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.

Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.

Today’s pleas are the result of an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. On Aug. 24, 2011, Isadore H. May, Richard J. Pisciotta Jr. and William A. Collins each pleaded guilty to one count of bid rigging in connection with their participation in a conspiracy to allocate liens at New Jersey municipal tax lien auctions.

Today’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force (FFETF). President Obama established the interagency FFETF to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.

The ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office. Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.

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THURSDAY, FEBRUARY 2, 2012
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FOUR INDIVIDUALS AND THREE CORPORATIONS CONVICTED FOR ROLES IN
WIRE FRAUD CONSPIRACY AT NEW YORK PRESBYTERIAN HOSPITAL

WASHINGTON — A Manhattan jury today convicted four individuals and three corporations for their participation in an eight-year conspiracy, involving kickbacks in excess of $2 million, to defraud New York Presbyterian Hospital (NYPH), the Department of Justice announced. In addition to today’s convictions, previously 10 individuals and three companies have pleaded guilty to date to charges arising out of this investigation.

After a four week trial, Michael Yaron and two companies owned by him, Cambridge Environmental & Construction Corp., which does business as National Environmental Associates (Cambridge/NEA), an asbestos abatement company, and Oxford Construction & Development Corp., a construction company; Moshe Buchnik, the president of two asbestos abatement companies; Santo Saglimbeni, a former vice president of facilities operations at NYPH; Artech Corporation, a company owned by a relative of Saglimbeni; and Emilio “Tony” Figueroa, a former director of facilities operations at NYPH were each convicted of engaging in a wire fraud conspiracy to defraud NYPH. Additionally, Yaron, Cambridge/NEA, Oxford, Buchnik, Saglimbeni and Artech were also convicted of wire fraud for transferring money electronically from the bank account of one co-conspirator to Artech’s bank account.

“We are very pleased that the jury found these individuals and companies guilty of conspiracy to defraud New York Presbyterian Hospital,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Justice Department’s Antitrust Division. “This verdict sends a clear message that corrupt purchasing officials and the contractors who paid them kickbacks will be held accountable for this type of illegal conduct.”

According to the court document, the scheme to defraud NYPH centered on Saglimbeni, with the assistance of Figueroa, awarding asbestos abatement, air monitoring and general construction contracts to Yaron, Buchnik, Cambridge/NEA and Oxford in return for over $2.3 million in kickbacks paid to Saglimbeni. A portion of those kickbacks were funneled by Yaron to Saglimbeni through Artech, a sham company Saglimbeni created in the name of his mother in order to conceal the kickbacks. Counts three and four of the superseding indictment charging Saglimbeni and Figueroa with mail fraud conspiracy and mail fraud were severed from the matter and will be tried on April 16, 2012, in U.S. District Court in Manhattan.

Sentencing for all defendants is scheduled for June 20, 2012, before Judge George B. Daniels. The wire fraud and wire fraud conspiracy charges each carry a maximum penalty of 20 years in prison for individuals and a $1 million criminal fine for individuals and companies. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The convictions announced today resulted from a federal antitrust investigation of bid rigging, fraud, bribery and tax-related offenses in the award of construction, maintenance and service contracts to the facilities operations department of NYPH.

The investigation is being conducted by the Antitrust Division’s New York Field Office with the assistance of the FBI and the Internal Revenue Service-Criminal Investigation’s New York Field Office. Anyone with information concerning bid rigging, bribery, tax offenses or fraud at NYPH should contact the Antitrust Division’s New York Field Office at 212-264-9308, visit www.justice.gov/atr/contact/newcase.htm or contact the FBI’s New York Division at 212-384-1000.

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FOR IMMEDIATE RELEASE
TUESDAY, JANUARY 17, 2012
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NEW JERSEY PIPE SUPPLY COMPANY AND OWNER SENTENCED FOR THEIR ROLE IN FRAUD AND BRIBERY CONSPIRACY IN POWER GENERATION INDUSTRY

Owner Sentenced to Serve 60 Months in Prison and to Pay a Total of $422,000 in Fines and Restitution; Company Sentenced to Pay a Total of $847,000 in Fines and Restitution

WASHINGTON — A New Jersey industrial pipe supply company and its owner were sentenced today for participating in a conspiracy to commit fraud and pay bribes to a purchasing manager at Consolidated Edison of New York (Con Ed) in return for the manager’s efforts to steer contracts to the company, the Department of Justice announced.

Bernard Grobart of New York City was sentenced in U.S. District Court in Manhattan by Judge Paul G. Gardephe to serve 60 months in prison and to pay a $125,000 criminal fine. Teneyck Inc., formerly known as Neill Supply Co. Inc. of Lyndhurst, N.J., was sentenced to pay a $550,000 criminal fine. Grobart and Teneyck were also sentenced to pay $297,000 in restitution, jointly and severally with their co-conspirators, to the victim, Con Ed. The company and its owner pleaded guilty on March 23, 2011, to participating in a conspiracy to defraud Con Ed from approximately November 2003 through approximately August 2008. Grobart also pleaded guilty to an obstruction count for instructing a subordinate employee at the company to delete an electronic document that was subpoenaed by the government.

According to court documents, Grobart and Robert D. Rosenberg, a former sales broker for Neill Supply, paid approximately $297,000 in cash bribes to James M. Woodason, a department manager of the purchasing department at Con Ed. In return, Woodason steered Con Ed industrial pipe supply contracts to Neill Supply by secretly providing Neill Supply with confidential competitor bid information, thereby causing Con Ed to pay higher, non-competitive prices for materials. According to court documents, Grobart also directed an employee of Neill Supply to destroy an electronic document that tallied the bribe payments in order to prevent the production of the document to a federal grand jury.

Con Ed is a regulated utility headquartered in Manhattan. It provides electric service to approximately 3.2 million customers and gas service to approximately 1.1 million customers in New York City and Westchester County, N.Y. Con Ed received more than $10,000 in federal funding each year between 2003 through 2010. Con Ed cooperated with the department’s investigation.

Including Grobart and Neill Supply, a total of four individuals and two companies have been charged as part of this investigation. On Dec. 9, 2011, Woodason was sentenced in U.S. District Court in Manhattan by Judge Denise L. Cote to serve 70 months in prison, to pay a $12,500 criminal fine and to pay approximately $528,000 in restitution, jointly and severally with his co-conspirators, to Con Ed. The remaining defendants are awaiting sentencing.

The charges arose from an ongoing federal antitrust investigation of bid rigging, bribery, fraud and tax-related offenses in the power generation industry. The investigation is being conducted by the Antitrust Division’s New York Field Office, with the assistance of the FBI and the Internal Revenue Service-Criminal Investigation. Anyone with information concerning bid rigging, bribery, tax offenses or fraud in the power generation industry should contact the FBI’s New York Division at 212-384-3720 or the Antitrust Division’s New York Field Office at 212-335-8000, or visit www.justice.gov/atr/contact/newcase.htm.

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FOR IMMEDIATE RELEASE
MONDAY, JANUARY 9, 2012
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CDR FINANCIAL PRODUCTS EXECUTIVE AND FORMER EXECUTIVE PLEAD GUILTY IN NEW YORK TO BID-RIGGING AND FRAUD CONSPIRACIES RELATED TO MUNICIPAL BOND INVESTMENTS

WASHINGTON — An executive and a former executive of Rubin/Chambers, Dunhill Insurance Services, also known as CDR Financial Products, pleaded guilty today in the Southern District of New York for their participation in bid-rigging and fraud conspiracies related to contracts for the investment of municipal bond proceeds and other related municipal finance contracts, the Department of Justice announced.

Zevi Wolmark, also known as Stewart Wolmark, the former chief financial officer and managing director of CDR, and Evan Andrew Zarefsky, a CDR vice president, pleaded guilty before U.S. District Judge Victor Marrero. CDR is a Beverly Hills, Calif.-based financial products and services firm. Wolmark and Zarefsky, together with CDR and its founder and president, David Rubin, were indicted on Oct. 29, 2009. Rubin and CDR pleaded guilty on Dec. 30, 2011.

Wolmark and Zarefsky each pleaded guilty to participating in separate bid-rigging and fraud conspiracies with various financial institutions and insurance companies and their representatives. These institutions and companies, or “providers,” offered a type of contract, known as an investment agreement, to state, county and local governments and agencies throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Wolmark and Zarefsky also pleaded guilty to one count of wire fraud in connection with those schemes.

“Through corruption and bid rigging, Zevi Wolmark and Evan Zarefsky reaped profits for their company by defrauding municipalities and denying them the competition they deserved,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Justice Department’s Antitrust Division. “Our investigation into the municipal bond derivatives industry has now led to guilty pleas by 12 financial executives and charges against six others.”

According to court documents, CDR was hired by public entities that issue municipal bonds to act as their broker and conduct what was supposed to be a competitive bidding process for contracts for the investment of municipal bond proceeds. Competitive bidding for those contracts is the subject of regulations issued by the U.S. Department of the Treasury and is related to the tax-exempt status of the bonds.

During his plea, Wolmark admitted that, from 1998 until 2006, he and other co-conspirators favored certain providers when determining which provider would win contracts for investment agreements. Wolmark also admitted that he ensured that certain providers won by soliciting intentionally losing bids from other providers and manipulated bidding in return for unearned or inflated fees. Additionally, Wolmark admitted that he signed certifications that contained false statements regarding whether the bidding process for certain investment agreements complied with relevant Treasury regulations.

Zarefsky admitted that he supplied information to providers to help them win bids, allowed providers to lower their bids and solicited intentionally losing bids from some providers so that other providers could win certain contracts.

“Municipal bonds are issued to fund public works or otherwise serve a public purpose,” said FBI Assistant Director-in-Charge Janice K. Fedarcyk of the New York Field Office. “Bid rigging in the investment of bond proceeds effectively reduces the potential yield on those proceeds, meaning the actions of these defendants had an adverse impact on the public. This wasn’t just self-interest. It was self-interest that ran directly counter to the public interest.”

“Today’s guilty pleas by Zevi Wolmark and Evan Zarefsky represent a milestone in the government’s investigation,” said Special Agent in Charge Charles R. Pine of the Internal Revenue Service-Criminal Investigation (IRS-CI) New York Field Office. “CDR and the firm’s employees have effectively been removed from the municipal bond market and will no longer be able to manipulate and control the bid process for the reinvestment of tax-exempt municipal bond proceeds. This scheme to conceal kickbacks through complex derivative transactions has come to an end. IRS Criminal Investigation will continue to investigate those who violate the law for financial gain at the expense of taxpayers.”

The bid–rigging conspiracy with which Wolmark and Zarefsky are charged carries a maximum penalty of 10 years in prison and a $1 million criminal fine. The fraud conspiracy with which they are charged carries a maximum penalty of five years in prison and a $250,000 criminal fine. The wire fraud charge with which each defendant is charged carries a maximum penalty of 20 years in prison and a $250,000 criminal fine. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Including today’s guilty pleas, 12 individuals have pleaded guilty in an ongoing federal investigation into the municipal bonds industry, which is being conducted by the Antitrust Division’s New York Field Office, the FBI and IRS-CI.

In addition, Dominick Carollo and Peter S. Grimm, formerly of GE Funding Capital Market Services, and Steven E. Goldberg, formerly of GE Funding Capital Market Services and FSA, were indicted on July 27, 2010, and are scheduled to begin trial in April 2012. Three former UBS employees, Peter Ghavami, Gary Heinz and Michael Welty, were indicted on Dec. 9, 2010.

Today’s guilty pleas are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force, visit www.stopfraud.gov.

Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-335-8000, the FBI at 212-384-5000 or IRS-CI at 212-436-1761, or visit www.justice.gov/atr/contact/newcase.htm.

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