Jail Time For Three Former Financial Services Executives
By: John A. Schwab
On October 18, 2012, three former financial services executives were sentenced in the U.S. District Court for the Southern District of New York for their involvement in conspiracies related to bidding for municipal finance contracts. The three were convicted after a three week trial and have been ordered to serve sentences ranging from 36 to 48 months in prison.
During the trial, the government presented evidence that the three defendants, who had been employed by affiliates of General Electric Company, participated in separate fraud conspiracies with various financial institutions and insurance companies from 1999 until 2006. The financial institutions and insurance companies offered investment agreements to state, county, and local governments throughout the United States as a way to raise money for public works projects. The government claimed that the defendants and their co-conspirators manipulated the bidding process for many investment agreements to increase the number and profitability of investment agreements awarded to their employers. The conspiracy deprived state, county, and local governments from more competitive interest rates for the investments, which, in turn, is alleged to have cost the municipalities millions of dollars.
Richard Weber, Chief of the IRS’s Criminal Investigation division, stated “The sentences handed down today send a clear message that crime motivated by outright greed will land you in jail. Quite simply, the defendant stole money from taxpayers and conspired to manipulate the competitive bidding system to benefit themselves instead of the towns and cities that needed this money for important public works projects. IRS Criminal Investigation is committed to working with our law enforcement partners to uncover this kind of abruption and secure justice for American taxpayers.” In this investigation, twenty individuals have been charged, including the three defendants sentenced on October 18.