Ex-UBS Municipal Derivatives Chief Facing Criminal Trial Set for July
Peter Ghavami, former co-head of UBS AG’s (UBSN) municipal-derivatives group, will go on trial July 9 along with two colleagues, Gary Heinz and Michael Welty, in a municipal bond bid-rigging case, a federal judge said.
The three, who have pleaded not guilty, are accused in a six-count indictment of engaging in “complex fraud schemes and conspiracies that subverted competition in the market for municipal finance contracts and deprived municipal bond issuers of the benefits of their investments,” according to court documents. U.S. District Judge Kimba Wood in Manhattan set the trial date today.
The case is one of three brought by the U.S. Justice Department’s antitrust unit in connection with a nationwide bid- rigging probe of contracts used by states and local governments to invest municipal-bond proceeds.
The conspiracy included more than 200 deals involving state agencies, local governments and non-profits across the country, according to documents filed in federal court.
The amount of evidence collected in the case is massive, Charles Stillman, a lawyer for Ghavami, said in court. The U.S. has provided more than 600,000 audiotapes and hundreds of millions of documents, he said.
An unidentified municipality hired Ghavami’s firm to handle the bidding for the investment of bond proceeds, government prosecutors allege. Ghavami preselected the winning bidder in exchange for a kickback to his employer, whom the government didn’t identify, in a conspiracy that began in October 2001 and ran until February 2002, according to the U.S.
The $100,000 kickback was “disguised as a re-hedge fee,” according to the complaint.
Stillman, Jonathan Halpern, a lawyer for Heinz, and Gregory Poe, a lawyer for Welty, all declined to comment after court.
In a separate case brought by the U.S., former CDR Financial Products Inc. Chief Financial Officer Z. Stewart Wolmark and Vice President Evan Zarefsky pleaded guilty on Jan. 9 to a multimillion-dollar scheme to rig municipal bond investments. CDR founder and former Chief Executive Officer David Rubin and his Beverly Hills, California-based firm pleaded guilty on Dec. 30.
The case is U.S. v. Ghavami, 10-cr-1217, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Patricia Hurtado in New York at pathurtado@bloomberg.net
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net
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