Three former UBS AG executives were convicted by a federal jury in New York on Friday for their participation in municipal bid-rigging frauds, the U.S. Department of Justice (DoJ) announced.
The DoJ reports that the three former executives, Peter Ghavami, Gary Heinz, and Michael Welty, were found guilty on several conspiracy and fraud charges in U.S. District Court. Heinz was also found not guilty on one count of witness tampering, and Welty was found not guilty on one count of substantive wire fraud. Their trial began on July 30. They were initially indicted on December 9, 2010.
According to the DoJ, evidence presented at trial showed that, while employed at UBS, Ghavami, Heinz, and Welty participated in separate fraud conspiracies and schemes with various financial institutions between March 2001 and November 2006 that involved bidding for municipal investment contracts. It says that they corrupted the bidding process for more than a dozen investment agreements to increase the number and profitability of the agreements awarded to UBS. At other times, it says they arranged for UBS to receive kickbacks in exchange for manipulating the bidding process and steering investment agreements to certain providers.
“For years, these executives corrupted the competitive bidding process and defrauded municipalities across the country out of money for important public works projects,” said Scott Hammond, deputy assistant attorney general of the antitrust division’s criminal enforcement program. “Today’s convictions demonstrate that the division is committed to holding accountable those who seek to unfairly and illegally undermine competitive markets.”
The DoJ says that a total of 20 individuals have been charged as a result of the department’s ongoing municipal bonds investigation. Including Friday’s convictions, a total of 19 individuals have been convicted or pleaded guilty, and one awaits trial. Additionally, one company has pleaded guilty.