Three former financial services executives face federal indictment for their alleged participation in fraud schemes and conspiracies related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts, the U.S. Department of Justice announced.
The 12-count indictment was filed in U.S. District Court in New York City. The indictment charges Dominick P. Carollo, Steven E. Goldberg and Peter S. Grimm with participating in wire fraud schemes and separate fraud conspiracies at various time periods from as early as 1999 until 2006.
The indictment identifies their employer at the time only as "a group of separate financial services companies located in New York, New York ... owned or controlled by a company headquartered in Fairfield, Connecticut," noting that the firms were providers of investment agreements known as "Provider B".
Both the Financial Times and The Bond Buyer cite sources that identify the company as GE Capital, which is headquartered in Fairfield.
According to The Bond Buyer, documents show the "Provider B" firms were affiliated with General Electric Co. and included FGIC Capital Market Services Inc., GE Funding Capital Market Services Inc., Trinity Funding LLC and Trinity Plus Funding LLC.
The charged conspiracies and schemes all relate to the provision of a type of contract, known as an investment agreement, to public entities, such as state, county and local governments and agencies throughout the United States.
The indictment charges that Carollo, Goldberg and Grimm conspired with various brokers to attempt to increase the number and profitability of investment agreements and other municipal finance contracts awarded to the provider companies where they were employed.
The government alleges that the three defendants and their co-conspirators conspired to control and manipulate the bidding for investment contracts, and the execution of a variety of certifications that covered up their scheme.
"The elaborate schemes outlined in the indictment boil down to efforts by these defendants to subvert the competitive bidding process for investment agreements. In the process, they defrauded public entities - and therefore, the public - and put bondholders at risk," said FBI Acting Assistant Director-in-Charge George Venizelos. "The FBI will continue to work with the Antitrust Division to ensure the integrity of competitive bidding in public finance."
All three defendants face prison time and fines is convicted.
The fraud conspiracy charges each carry a maximum penalty per count of five years in prison and a $250,000 fine; the wire fraud charges each carry a maximum penalty per count of 20 years in prison and a $1 million fine.
Click here to read the full account of the allegations as outlined by the Department of Justice.
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