Another Guilty Plea in Muni-Bond Scandal

Bank of America and an informant have played a key role in the massive DOJ case that is currently ripping through the muni-bond market, so this info isn't all that surprising:

WASHINGTON — Douglas Lee Campbell, a former senior vice president and marketer in Bank of America’s municipal derivatives group, pleaded guilty Thursday to three criminal counts for engaging in bid-rigging and fraud conspiracies connected with guaranteed investment contract and other municipal finance agreements.The Justice Department announced that Campbell pleaded guilty to conspiracy to restrain trade, conspiracy, and wire fraud in the U.S. District Court for the Southern District of New York in Manhattan. Court documents only identify Campbell’s former employer as “Bank A, a financial institution that was a national bank.” But documents show that Campbell worked at Bank of America from about June 1998 through at least August 2002. He worked as a managing director at Piper Jaffray Fixed Income Derivatives in Minneapolis after that, according to The Bond Buyer’s Municipal Marketplace.

The Justice Department charged Campbell, Bank of America, CDR Financial Products — formerly Rubin/Chambers Dunhill Services Inc. — and others with conspiring to rig bids for GICs and other municipal securities contracts from as early as 1998 until September 2005. Initially, Campbell worked at the bank’s office in Charlotte, N.C., but later was based in New York City. His compensation and bonus were based in part on the amount of revenue generated by the municipal derivatives group.

According to the Justice Department, on numerous occasions when Bank of America was underwriter on a muni bond deal, it recommended the issuer hire CDR to broker the process for obtaining GICs or other investment agreements. In exchange, CDR and the bank would rig the bids to try to ensure the bank won one or more of the investment agreements associated with the bond issue. The bank would then pay CDR inflated or unearned fees in exchange for assistance in controlling the bidding process.

Of course CDR was also politically connected, which in all likelihood gave certain financial houses an advantage when bidding time rolled around