Another Look at the Indictment of CDR Financial Products Top Executives

An older bit of information in regards to the indictment, but still informative:

As part of the fraud conspiracies alleged in the indictment, CDR, Rubin, Wolmark and Zarefsky gave particular co-conspirator providers information about the prices, price levels or conditions in competitors’ bids, a practice known as a “last look,” which is explicitly prohibited by the Treasury regulations. In exchange, CDR received kickbacks from these providers and relied on them to submit intentionally losing bids when requested. The efforts by CDR and the three executives to control and manipulate the bidding for investment contracts, and the execution of a variety of certifications that covered up their scheme, also obstructed the IRS’s ability to monitor compliance with the Treasury regulations and to determine whether municipal issuers had correctly accounted for any money that was owed to the Treasury.

More interesting is what the punishment might entail:

The bid-rigging conspiracy that Rubin, Wolmark and Zarefsky are charged with carries a maximum penalty of 10 years in prison and a $1 million fine. The fraud conspiracies that Rubin, Wolmark and Zarefsky are charged with carry a maximum penalty of five years in prison and a $250,000 fine. The wire fraud charges against the three individuals each carries a maximum penalty of 20 years in prison and a $1 million fine. The false statement charge against Zarefsky carries a maximum penalty of five years in prison and a $250,000 fine. The fraudulent bank transaction charge against Rubin carries a maximum penalty of 30 years in prison and a $1 million fine. The obstruction of the IRS charge against the three individuals carries a maximum penalty of three years in prison and a $5,000 fine. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

CDR faces a maximum fine of $100 million for the bid-rigging charge, $500,000 for each of the fraud conspiracies, and $500,000 for each of the wire fraud charges. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Of course the biggest loss would be getting frozen out of the 2.6 trillion dollar muni-bond market.