Ex-BofA Executive Avoids Jail for Muni Bond Bid-RiggingErik Larson
A former Bank of America Corp. senior vice president, who cooperated with prosecutors probing a conspiracy to rig bids in the $3.7 trillion municipal bond market, won’t go to jail for his role in the scheme.
Douglas Campbell, who faced as long as 35 years in prison, was ordered to pay $300 and received no other penalty at his sentencing today before U.S. District Judge Kimba Wood in Manhattan, the Justice Department said. Testimony by Campbell helped secure convictions of others in the scheme, including three ex-UBS AG employees found guilty following a 2012 trial.
“I have never represented a cooperating defendant who has given so much for so long at such cost to himself and his family,” Campbell’s lawyer, Walter Mack, said in a letter to the judge yesterday in which he sought leniency for his client. Campbell won’t commit the crime again, he said.
More than a dozen people from companies including Bank of America, JPMorgan Chase & Co. and UBS have pleaded guilty in the investigation by the Justice Department’s Antitrust Division. The three banks, plus Wells Fargo & Co. and General Electric Co., have paid more than $700 million in restitution and penalties as part of the probe.
Campbell, a municipal derivatives salesman at the bank from 1998 to 2002, was accused in July 2010 of arranging in advance the winning bidder for investment agreements and other municipal finance contracts, court records show. Campbell also helped arrange losing bids to give the appearance of legitimate competition, with the understanding that those bidders would be compensated later, the U.S. said.
Bank of America, which self-reported the illegal activity, described Campbell as a capital markets sales officer and senior securities and product salesperson. He pleaded guilty in September 2010 and agreed to cooperate in a bid for leniency.
Bill Halldin, a spokesman for Charlotte, North Carolina-based Bank of America, declined to comment on today’s sentencing.
Campbell testified that he conspired with three former UBS employees to rig bids on municipal bonds. Michael Welty and Gary Heinz, former vice presidents at UBS, and Peter Ghavami, the former head of UBS’s municipal derivatives group, were found guilty by a New York jury in August 2012.
Mark Zaino, a former UBS employee who cooperated with investigators and testified about the bid-rigging, also avoided jail time when he was sentenced in March.
Bank of America has been cooperating for about five years with prosecutors who say that bankers paid kickbacks to CDR Financial Products Inc. to rig bids on investment contracts sold to local governments.
Municipalities bought the contracts with money raised through bond sales, which allowed them to earn a return until the funds were needed for schools, roads and other public works.
Six former employees of CDR, including its founder and former chief executive officer, David Rubin, have pleaded guilty in the investigation. The government said CDR received as much as $475,000 in kickbacks for rigging bids.
The case is U.S. v. Campbell, 1:10-cr-00803, U.S. District Court, Southern District of New York (Manhattan).