Three former General Electric Co. (GE:US) bankers were sentenced to prison terms ranging from three to four years for defrauding cities and the U.S. Internal Revenue Service in a bid-rigging scheme involving municipal bonds.
U.S. District Judge Harold Baer in Manhattan sentenced Steven Goldberg to four years in prison while Peter Grimm and Dominick Carollo each received three years.
“Corruption and greed certainly is what this case was about,” Baer said before sentencing the men.
The three were found guilty by a federal jury in Manhattan in May of conspiracy to commit fraud by manipulating auctions for municipal bond investment contracts. Lawyers for the men today urged Baer to give their clients non-prison sentences. Each of them addressed the court in a hearing today, breaking down while asking Baer for leniency.
In addition to the prison time, Baer fined Goldberg $90,000 and Carollo and Grimm each $50,000.
The government claimed that from August 1999 to November 2006 the men gave kickbacks to brokers hired by local governments to solicit bids, to win auctions and to increase their profits.
The charges grew out of a five-year investigation by federal antitrust prosecutors into the $3.7 trillion municipal bond market. In December, GE agreed to pay $70.4 million to resolve its part of the investigation. Bank of America Corp. (BAC:US), JPMorgan Chase & Co. (JPM:US), UBS AG (UBSN) and Wells Fargo & Co. (WFC:US) have acknowledged illegal activities by former employees and paid more than $670 million in restitution and penalties.
The case against the three former GE bankers focused on guaranteed investment contracts, or GICs, which cities buy with the money raised from selling bonds. The arrangement lets the cities earn money on the funds until they’re used for projects including new waste treatment plants, hospitals and roads.
A total of 19 people and one company have been convicted or pleaded guilty in the government’s investigation of the municipal bond market, the Department of Justice said in a statement today. One person is awaiting trial.
In August, three former UBS employees were convicted in a trial in Manhattan of rigging bids for investing the proceeds of municipal bond sales.
The case is U.S. v. Carollo, 10-cr-00654, U.S. District Court, Southern District of New York (Manhattan).
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