Peter Ghavami, Gary Heinz and Michael Welty were charged in 2010 by the U.S. Department of Justice as part of its broad investigation of the $3.7 trillion U.S. municipal bond market. The probe has focused on rooting out schemes to fix prices and rig bids on bond transactions, and has ensnared some of the world's largest banks.
The three men "steered financial contracts to their friends in exchange for kickbacks and other favors," Justice Department prosecutor Kalina Tulley told the jury in her opening statement in U.S. District Court in Manhattan.
Lawyers for the three men responded on Monday that their clients were wrongly targeted in the government's investigation, and that the U.S. case was built on a series of lies by co-conspirators turned government cooperators.
"You will find no evidence that 11 years ago, a 27-year old Gary Heinz went to work intending to defraud anyone," Heinz attorney Marc Mukasey told the jury. The government case was faulty because it relied on witnesses who provided a "version of events that's fake, that's phony and that's false."
The three bankers are charged with at least three counts each of conspiracy to commit wire fraud for rigging bids in 2001 and 2002 for guaranteed investment contracts, which cities and counties use to park proceeds from municipal bond sales.
The conspiracy charges carry a maximum of five years in prison each.
EX-JPM BANKER TO TESTIFY
The U.S. government has a 10-year window to bring criminal charges over suspected crimes that affect financial institutions. In this case, since the three bankers were charged in December 2010, the case falls within the statute of limitations, U.S. District Judge Kimba Wood has ruled.
Thirteen individuals and one company have pleaded guilty to charges stemming from the investigation. A total of 19 people have been charged.
In May, three former financial services executives were convicted by a federal jury in Manhattan on similar charges after a four-week trial. Dominick Carollo, Steven Goldberg and Peter Grimm are due to be sentenced on Oct. 11.
In July, former JPMorgan Chase & Co banker Alexander Wright pleaded guilty to one count of conspiracy to commit wire fraud for manipulating the bidding process for a June 2002 contract. [ID: nL2E8IIIBU]
Tulley said that Wright, along with several other witnesses who were charged and have pleaded guilty, will be called to testify in the four-week-long UBS trial.
Ghavami, a Belgian national, left UBS in 2007 as global head of commodities. Both Heinz, of Jersey City, New Jersey, and Welty, of New York, worked on UBS' municipal bond reinvestment and derivatives desk at the time of the suspected offenses.
The case is USA v. Peter Ghavami et al, U.S. District Court, Southern District of New York, No. 12-cr-1217.
Original Article
Source: huffington post
Author: Basil Katz
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