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Court Documents Reveal Municipal Bond Bid-Rigging Scheme

November 25, 2010 by  

Court Documents Reveal Municipal Bond Bid-Rigging SchemeBanking executives from some of the country’s largest banks rigged bids and paid kickbacks to win deals involving municipal bond sales, a scheme that may have cost taxpayers as much as $1 billion and is the biggest criminal conspiracy in the history of the 198-year-old municipal finance market, according to documents filed in a New York Federal court.

Details of the criminal conspiracy are being reported in an upcoming issue of Bloomberg Markets Magazine.

According to Bloomberg, Douglas Campbell, once one of Bank of America Corporation’s most successful derivatives salesmen, described the conspiracy as he entered his guilty plea in a Manhattan Federal Courtroom in September.

Bloomberg reports that Campbell told U.S. District Judge William Pauley, “I had conversations prior to the bid with the broker about who the bidders were going to be and who was going to win or lose.” He admitted paying kickbacks to win deals to CDR Financial Products Inc., a Los Angeles-based firm that had been hired by municipalities to run auctions for investment contracts. He’s one of seven bankers and brokers who have pleaded guilty to conspiracy and fraud charges.

Court documents show that bankers routinely rigged bids and lied about their crimes between 1998 and 2005. Following every transaction, the bankers fraudulently signed a pledge certifying that they had adhered to U.S. Treasury Department rules barring them from seeing other bids.

The bankers attempted to cover up their scheme by using personal identification numbers to reach bidding agents directly on their BlackBerrys and routinely used personal mobile phones instead of the bank’s tape-recorded telephone lines, Bloomberg reports.

“When I participated in this scheme, I knew it was illegal,” Mark Zaino, a former banker with UBS AG, told a U.S. District Court judge in New York as he entered a guilty plea in May.

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  • Tom

    What happens to a free, democratic nation when the predators and parasites outnumber and thus are able to exercise official government control over economic producers?

    Is America in decline? Have we already passed the point of no return?

    • Mick

      Tom says:
      November 25, 2010 at 7:20 am
      What happens to a free, democratic nation when the predators and parasites outnumber and thus are able to exercise official government control over economic producers?

      Is America in decline? Have we already passed the point of no return?

      Tom,,,,When the wide spread Liberalism allowed more rights to criminals than to the law abiding citizens those types of things were sure to happen….
      liberty shouldn’t include the left so called compassion to make a country strong, America was the envy of the world and with the progressive mentality became the door mat of the world.
      Is America in decline you say ?? America is damn near lost………

      • Carole Howell

        Oh! we have damn near lost it, but not because of liberalism, many of our nations forefathers and founders of our country were liberal. You have to have both wings to fly right. I believe you do not even know what the term really means.

        Listen to the speeches of both Ron Paul and Dennis Kucinch, one is liberal and one is conservative and they are both incorruptible, they both agree on many issues. At least about the corruption that is running rampant in this country. They are amount the few who stand up for the interests of the people in this country.

        Then there is Peter Defazio of Oregon….He is a Progressive Democrat of a type we could use more of.

        Insists Trade Policies Must Defend American Jobs

        WASHINGTON, DC – Today Peter DeFazio and a dozen other members of the House Trade Working Group met with President Obama to insist on trade policies that protect American jobs.

        Americans’ have made clear that their number one priority is the creation of secure family wage jobs, and rightfully so considering that nationwide unemployment remains at 9.6%. Rather than pay heed to this stark message, however, President Obama is in the midst of negotiating a free trade agreement with South Korea that follows the same failed trade model as NAFTA and the Bush free trade agreements. Despite rosy promises to the contrary, these free trade agreements have shipped millions of American jobs overseas, decimated entire swaths of American manufacturing, and exacerbated the continuing recession.

        Members of the House Working Trade Group offered the President suggestions to make the South Korean FTA a level playing field that benefits American workers as much as it benefits corporate profits. The President was receptive and understood that prior trade agreements failed to live up to the promises made to the American worker.

        “I told the President that I will not support another failed free trade agreement that repeats the same mistakes of past agreements,” said DeFazio. “Americans have been promised great benefits from Free Trade Agreements for 20 years, but all they have delivered is outsourcing and trade deficits. Our manufacturing base has been decimated and working men and women are fed up with the one-way trade policies that work for big business and foreign countries but have left Americans behind. We must do better.”

        “I was pleased the President indicated support for a national manufacturing strategy, but such a strategy should be enacted first and should inform future trade agreements in order to boost U.S. manufacturing rather than ship it overseas,” DeFazio continued.

        DeFazio has voted against all free trade agreements, including NAFTA and most-favored nation trading status for China. He has called for these agreements to be renegotiated in a manner that protects American jobs and revitalizes America’s manufacturing base.

        Where are the Conservatives that stand with him?

        • JJ

          You said that the most important thing is jobs. I totally disagree.
          Being a conservative is about values, ethics, etc.. Our financial crisis in this country is a symptom and not the root of the problem. Kick the corrupt federal gov back to Washington and get them out of our lives would be a good start. You progressives have done everything you can to kick God out of the daily lives of people. Because of this there’s no conviction of right and wrong. It’s only wrong if you get caught. With out believing in a Creator God there is no purpose for man except to eat drink and be merry, for tomorrow you die, he who dies with the most toys wins attitude. Well you progressives and liberals have to a degree gotten what you strive for and you don’t like the results, but instead of seeing the problem for what it is you push ahead with your humanistic ways expecting things to get better and as much as you tell people not to steal, not to hurt others you have accomplished nothing. Corruption is getting worse instead of better, why because their’s have no reason not to, but when people believed in heaven and hell things where a lot better.

    • Robert Smith

      Ayn Rand called the evil folks who took from others without any return “looters.”


    • Bleh

      Peasants tended to revolt in the old days.
      Nowadays we tend to rise up vote for the party not in power.
      When it becomes obvious this will fail to affect change that the people can believe in then perhaps they will revert to older methods to affect change.

  • Ain’t Gona Happen

    The sound you will soon hear will be a slap on the wrist. How dare the court challenge a bank over another of their schmes! Noboby will go to jail.

  • bjholmes

    Ordinary citizens are too busy working and raising their children to be able to watch the many criminal acts against them. They would have a watch-out, but we are too tired at the end of the day. They were raised expecting the best of their elected officials. When God was dropped, morals went haywire. When we set our own standards, that too, is dropped. We need God. It’s easy to see what happens without God. Look around!!!!
    Obummer is taking advantage of this situation. He is setting the stage to let Palestinians, Mexicans, Muslims, who only knows who else enter our country, take our possessions, and enslave us. Read HB1366.
    He wants us to be bankrupt, without a means to protect ourselves, without fuel, our food being poisened by China, and everything else we receive from China, our allies against us, and dictatorships against us. He thinks maybe dictators will help him in his task. They think he’s too dumb. Only God knows. With God’s help we build a great nation. Without God’s blessings, we fall.

    • Proud to be a Christian

      Very very well stated. You hit the nail on the head. In coming articles Bob, I would like to see Bills as they come up for vote in the House of the main points, ie on the Healthcare, all the stuff that shouldn’t be there, ie 3.8% federal tax when you sell your home, funding of black colleges, 1099 issuance to everyone over 600$, hiring of the personal army that only reports to the President, etc. etc. etc. That way before it is passed we can lamblast our representatives and try and make a difference. I don’t like to find out about it later. I know that is a difficult task, but it would be wonderful. Thanks again for all of your articles and thanks to all of the bloggers for such wonderful information.

      • rosina

        Most of the items you list have already BEEN PASSED.
        wITH ITS OBUMMER ARMY, ITS ABORTION PAID BY US ALL, KILLING OF THE ELDERLY WITH THE SO-CALLED COMMITTEES.ETC> and all the pork added in that has nothing to do with health!
        I followed the process and sent so many faxes directly to senators etc. prior to signature but did not even get replies. When I did it was to the effect, we hear and understand you etc. Lying pigs.
        But your suggestion is good. The immigrant act is the next big bomb which will cost over 44billion from us-the taxpayers. Why doesn’t Congress pay? They vote themselves payraises instead and agree to vote THEMSELVES out of so many LAWS, that affect ‘we the people” SOME EQUALITY!

  • Jim K.

    Executive greed, moral decay, ACLU, atheist,and other anti christian groups aganist God and our country and now with corrupt Obama leading a corrupt goverment while protecting and pushing muslims all contribute to top down criminal behavior. Hopefully the Nov. 2nd elections won by good citizens (still not all) will start to turn American around to support a nation by the people for the people under our creator. We can only hope and pray to God our good honest citizens will prevail taking back America before we loose our country to the corrupt criminals. Keep the faith!!!!

  • RAPTOR- California

    Liberalism at its best!

  • Al

    The “scheme” started in 1913 and @#$% rolled down hill ever since.
    Congress legalized the “Cartel” as their laundry machine.
    Therefore, how can you expect Al Capone to say Baby face Nelson is bad?
    Like “Griffin” said: It’s like asking the fox to build the hen house then install the security system”… how true.

    • JJ

      I’m sure you’d prefer MSNBC.

  • smithington

    Check out a documentary called, “Terrorstorm: A History of Government Sponsored Terrorism”, on Netflix

  • robert verdi

    all you want to know about the muni-bond scandal and understand this is owned by the Democratic party.

  • Andy

    Inflation is not caused by the actions of private citizens, but by the government: by an artificial expansion of the money supply required to support deficit spending. No private embezzlers or bank robbers in history have ever plundered people’s savings on a scale comparable to the plunder perpetrated by the fiscal policies of statist governments.


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