Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

UBS Bid-Rigging Defendant Was ‘Idiot,’ Witness Tells Jury

A key government witness against three former UBS AG municipal-bond executives in a bid-rigging trial called one of the defendants an “idiot” and was asked today whether he disliked him so much that he put photos of tortured cats on his desk.

Mark Zaino, a former employee on the bond desk at UBS’s New York office, told the jury today that while he had joked with one of the defendants, Michael Welty, about cats, he didn’t remember placing specific images on Welty’s desk.

Zaino testified for the sixth day in Manhattan federal court in a criminal trial against Peter Ghavami, the former head of Zurich-based UBS’s municipal derivatives group, Welty and Garry Heinz, who were both vice presidents and municipal reinvestment marketers. The three are charged with conspiracy to defraud municipal-bond issuers and U.S. tax authorities by fixing prices on investing agreements.

Gregory L. Poe, a lawyer for Welty, questioned Zaino about how he felt about his former co-worker.

“You didn’t like Mr. Welty, did you?” Poe said. “You regarded him as very limited?”

Zaino said “at times” he thought Welty was an “idiot,” and that he thought Welty had limited technical abilities.

Later, Poe asked Zaino about testimony he gave earlier in the week alleging that Welty had improperly tipped off some bidders to ensure they won certain municipal bond deals.

The jury had heard audio recordings during Zaino’s earlier testimony of phone calls in which Welty asked bidders for their “indications” and told them when their suggested amount was significantly higher or lower than other bids received.

Feeling ‘Burned’

“It was perfectly appropriate to tell someone they’re wide or out of line, right?” Poe asked. A bidder “who made a mistake and was forced to accept the bid felt burned, right?”

Zaino said a bidder might stop working with a particular agent if the bidder felt the agent allowed him to submit an out-of-line bid. He said the “primary reason” he would let someone lower a bid was when he thought the bidder made a mistake.

Zaino, who pleaded guilty to three criminal counts in 2010, faces as long as 35 years in prison and is cooperating in a bid for a shorter sentence.

Charles Stillman, an attorney for Ghavami, wrapped up the cross-examination this afternoon with questions aimed to show that Zaino, and not Ghavami, was the driving force behind rigged deals.

‘Plan to Steer’

“You approached Peter Ghavami over here with a plan to steer this to Doug Campbell” at Bank of America Corp., Stillman asked Zaino, and Zaino confirmed.

Jurors were shown an e-mail Campbell sent to Zaino thanking him and Ghavami for a breakfast meeting and asking about a transaction Zaino has testified the group rigged. Zaino forwarded the e-mail to Ghavami, leaving only the “thank you” in the message, and removed the reference to the bond deal.

“Before you forwarded it, you altered it,” Stillman said. “You eliminated the sentence that referred to the Massachusetts transaction.”

Prosecutors began their re-examination of Zaino after Stillman concluded. Zaino is scheduled to continue testifying tomorrow.

The case is U.S. v. Ghavami, 10-cr-1217, U.S. District Court, Southern District of New York (Manhattan).

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.