The charges against Kanefsky stem from those filed against the three former GE employees; Kanefsky’s firm was one of four unidentified investment-contract brokers mentioned in their indictment last month.
Kanefsky conspired with employees of financial firms identified only as Marketer A, Marketer B-1 and Marketer B-2 on investment contract deals from 1999 through 2006, according to a copy of the charges released by the Justice Department.
Court documents obtained by Bloomberg News and now under seal identified the employees as Steven Goldberg and Peter Grimm, two of the former GE workers charged last month. After leaving GE, Goldberg went to Financial Security Assurance Holdings Ltd., a former unit of Dexia SA.
Goldberg, Grimm and Dominick Carollo, their supervisor at GE, all pleaded not guilty to fraud and conspiracy charges on July 30.
‘Shave It’
The Kanefsky charges say he gave the marketers information about rivals’ bids, allowed them to change their bids after submitting them, and that he filed false certifications that such auctions were competitive.
Kanefsky’s actions allowed bidders to land the deals at “artificially determined or suppressed rates” that cost his government clients, according to the charges.In April 2005, for instance, Goldberg asked Kanefsky whether his bid for a contract was too high, according to the charges and the sealed court record. Kanefsky said that if it was, he would “shave it a little,” and later advised Goldberg to offer less than he was willing to in order to win. Goldberg cut his offer and won, according to the records.
It can't be good news for those awaiting trial that people keep throwing in the towel and agree to testify. As for Kanefsky, it appears his actions are quite serious:
According to the court documents, Kanefsky engaged in one fraud conspiracy from as early as October 2001 until at least November 2006, and in a second fraud conspiracy from as early as August 1999 until at least November 2006. In each conspiracy, Kanefsky gave 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 U.S. Treasury regulations. Kanefsky also solicited and received intentionally losing bids for certain investment agreements and other municipal finance contracts. As a result of the bid manipulation, the co-conspirator providers won contracts at artificially determined price levels, which deprived municipal issuers of money and property.
As for receiving intentionally losing bids, it points to the alleged bid-rigging that may have affected the muni-bond market from top to bottom. It it is possible that the financial houses may have divide up the "profits" ahead of the actual bids so they would all get a cut of the action. It reminds me of this news reported last year about the collusion in the market:
Bond Buyer
According to both suits, traders on B of A’s muni derivatives trading desk knew ahead of time when the bank would be awarded a deal. They also understood that on some deals, a provider other than the bank would win, “but also knew that Bank of America would make it up on the deals where it was agreed that it would be the winning bidder.”
The “unlawful pre-selection practice” was so widespread that Phillip Murphy, the former managing director of B of A’s muni derivatives department, “expressed dissatisfaction if the CW did not know who would win a trade before it was bid.” The collusive practices continued after Murphy left the bank to become a principal at Winters & Co. in 2002, the Hausfeld suit said.
Outrageous.
This is only the Tip of the ice-berg!
ReplyDeleteWhen they get to the meat of the real crimes, and they will, then it will change this culture of corruption that believes that it is somehow OK to steal money from the U.S. taxpayer.
Is years past this was akin to treason and public execution.