TOXICS RELEASE INVENTORY NATIONAL ANALYSIS IS RELEASED BY EPA

The following excerpt is from the EPA website:

“WASHINGTON – The U.S. Environmental Protection Agency (EPA) is releasing its annual national analysis of the Toxics Release Inventory (TRI), providing all Americans with vital information about their communities. The TRI program publishes information on toxic chemical disposals and other releases into the air, land and water, as well as information on waste management and pollution prevention activities in neighborhoods across the country. Total releases including disposals for the latest reporting year, 2010, are higher than the previous two years but lower than 2007 and prior year totals. Many of the releases from TRI facilities are regulated under various EPA programs and requirements designed to limit human and environmental harm.

 
“We will continue to put accessible, meaningful information in the hands of the American people. Widespread public access to environmental information is fundamental to the work EPA does every day,” said EPA Administrator Lisa P. Jackson. “TRI is a cornerstone of EPA's community-right-to-know programs and has played a significant role in protecting people’s health and the environment by providing communities with valuable information on toxic chemical releases.”

Citizens have a right to know what toxic chemicals are being released into their communities. Over the past 25 years, the TRI program has helped citizens, emergency planners, public health officials, and others protect human health and the environment by providing them with toxic chemical release and other waste management data they need to make decisions that affect the safety and welfare of their communities.

The 2010 TRI data show that 3.93 billion pounds of toxic chemicals were released into the environment nationwide, a 16 percent increase from 2009. The increase is mainly due to changes in the metal mining sector, which typically involves large facilities handling large volumes of material. In this sector, even a small change in the chemical composition of the ore being mined -- which EPA understands is one of the reasons for the increase in total reported releases -- may lead to big changes in the amount of toxic chemicals reported nationally. Several other sectors also reported increases in toxic releases in 2010, including the chemical and primary metals industries.

Total air releases decreased 6 percent since 2009, continuing a trend seen over the past several years. Releases into surface water increased 9 percent and releases into land increased 28 percent since 2009, again due primarily to the metal mining sector.

EPA has improved this year’s TRI national analysis report by adding new information on facility efforts to reduce pollution and by considering whether economic factors could have affected the TRI data. With this report and EPA’s Web-based TRI tools, citizens can access information about the toxic chemical releases into the air, water, and land that occur locally. Finally, EPA’s first mobile application for accessing TRI data, myRTK, is now available in Spanish, as are expanded Spanish translations of national analysis documents and Web pages.

TRI data is submitted annually to EPA and states by multiple industry sectors including manufacturing, metal mining, electric utilities, and commercial hazardous waste facilities. Facilities must report their toxic chemical releases to EPA under the federal Emergency Planning and Community Right-to-Know Act (EPCRA) by July 1st of each year. The Pollution Prevention Act of 1990 also requires information on waste management activities related to TRI chemicals.”

SEC ALLEGES FRAUD BY LIFE SETTLEMENT COMPANY AND THREE EXECUTIVES

The following excerpt is from the SEC website:

Jan. 3, 2012
“Washington, D.C., — The Securities and Exchange Commission today charged Texas-based financial services firm Life Partners Holdings Inc. and three of its senior executives for their involvement in a fraudulent disclosure and accounting scheme involving life settlements.

The SEC alleges that Life Partners chairman and CEO Brian Pardo, president and general counsel Scott Peden, and chief financial officer David Martin misled shareholders by failing to disclose a significant risk to Life Partners’ business: the company was systematically and materially underestimating the life expectancy estimates it used to price transactions. Life expectancy estimates are a critical factor impacting the company’s revenues and profit margins as well as the company’s ability to generate profits for its shareholders.

The SEC alleges that Life Partners and the three executives were involved in disclosure violations and improper accounting that Life Partners used to overvalue assets held on the company’s books and create the appearance of a steady stream of earnings from brokering life settlement transactions. The SEC further charged Pardo and Peden with insider trading in their shares of Life Partners stock while in possession of material, non-public information indicating that the company had systematically and materially underestimated life expectancy estimates.

“Life Partners duped its shareholders by employing an unqualified medical doctor to assign baseless life expectancy estimates to the underlying insurance policies,” said Robert Khuzami, Director of the SEC's Division of Enforcement. “This deception misled shareholders into thinking that the company's revenue model was sustainable when in fact it was illusory.”

David Woodcock, Director of the SEC’s Fort Worth Regional Office, added, “The senior-most executives at Life Partners concealed significant risks to the business, manipulated financial statements with improper accounting, and knowingly profited from their misconduct by executing insider trades based on information that was not available to the public.”

Life Partners is a Nasdaq-traded company that generates virtually all of its revenues from brokering life settlements. Life settlements involve the purchase and sale of fractional interests of life insurance policies in the secondary market. In life settlement transactions, life insurance policy owners sell their policies to investors in exchange for a lump-sum payment. The dollar amount offered by the investor takes into account the insured’s life expectancy and the terms and conditions of the insurance policy.

According to the SEC’s complaint filed in federal district court in Waco, Texas, Life Partners misrepresented and failed to disclose in public filings with the SEC that the company’s systematic use of materially underestimated life expectancy estimates constituted a material risk to the company’s revenues. Beginning in 1999, the company used life expectancy estimates provided by Dr. Donald T. Cassidy, a Reno, Nev.-based doctor with no actuarial training or prior experience rendering life expectancy estimates. The SEC alleges that Life Partners and Pardo failed to conduct any meaningful due diligence on Cassidy’s qualification to act as a life expectancy underwriter and instructed the doctor to use a life expectancy methodology that was created by the company’s former underwriter, a part-owner of Life Partners. Pardo, Peden, and Martin were aware that the Cassidy-rendered life expectancy estimates were systematically and materially short.

The SEC alleges that Life Partners materially misstated net income from fiscal year 2007 through the third quarter of fiscal year 2011 by prematurely recognizing revenues and understating impairment expense related to its investments in life settlements. Life Partners improperly accelerated revenue recognition from the closing date to the date it obtained a non-binding agreement with the policy owner to sell a life settlement. Life Partners use of Cassidy’s life expectancy estimates as part of its impairment calculations caused the company to understate millions of dollars in impairment expense.

The SEC further alleges that during this time, Pardo and Peden sold approximately $11.5 million and $300,000 respectively of Life Partners stock at inflated prices while in possession of material non-public information about the company’s dependency on short life expectancy estimates to generate revenues.
In addition to the alleged violations of the antifraud and reporting provisions of the federal securities laws by Life Partners, Pardo, Peden and Martin, the SEC’s complaint also seeks repayment to the company of stock sales profits and bonuses received by Pardo and Martin pursuant to Section 304 of the Sarbanes Oxley Act of 2002.”

BEVERLY HILLS FINANCIAL FIRM PLEADS GUILTY TO BID-RIGGING IN THE MUNICIPAL BOND MARKET

The following excerpt is from the Department of Justice website:

“WASHINGTON — A Beverly Hills, Calif.,-based financial products and services firm, and its founder and owner pleaded guilty today in the Southern District of New York for their participation in bid-rigging and fraud conspiracies related to contracts for the investment of municipal bond proceeds and other related municipal finance contracts, the Department of Justice announced.

Rubin/Chambers, Dunhill Insurance Services, also known as CDR Financial Products, and David Rubin, CDR founder and owner, pleaded guilty before U.S. District Judge Victor Marrero in the Southern District of New York. Rubin and CDR, along with Zevi Wolmark, also known as Stewart Wolmark, the former chief financial officer and managing director of CDR, and Evan Andrew Zarefsky, a vice president of CDR, were indicted on Oct. 29, 2009. The trial for Wolmark and Zarefsky is scheduled to begin on Jan. 3, 2012, in the Southern District of New York.

Rubin and CDR each pleaded guilty to participating in separate bid-rigging and fraud conspiracies with various financial institutions and insurance companies and their representatives. These institutions and companies, or “providers,” offered a type of contract, known as an investment agreement, to state, county and local governments and agencies throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Rubin and CDR also pleaded guilty to one count of wire fraud in connection with those schemes.

“Mr. Rubin and his company engaged in fraudulent and anticompetitive conduct that harmed municipalities and other public entities,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Justice Department’s Antitrust Division. “Today’s guilty pleas are an important development in our continued efforts to hold accountable those who violate the antitrust laws and subvert the competitive process in our financial markets.”

According to court documents, CDR was hired by public entities that issue municipal bonds to act as their broker and conduct what was supposed to be a competitive bidding process for contracts for the investment of municipal bond proceeds. Competitive bidding for those contracts is the subject of regulations issued by the U.S. Department of the Treasury and is related to the tax-exempt status of the bonds.

During his plea hearing, Rubin admitted that, from 1998 until 2006, he and other co-conspirators supplied information to providers to help them win bids, solicited intentionally losing bids, and signed certifications that contained false statements regarding whether the bidding process for certain investment agreements complied with relevant Treasury Regulations. Additionally, Rubin admitted that he and other co-conspirators solicited fees from providers, which were in fact payments to CDR for rigging or manipulating bids for certain investment agreements so that a particular provider would win that agreement at an artificially determined price.

“Mr. Rubin and his firm were trusted with public money and confidence to assist municipalities with issuing bonds,” said FBI Assistant Director in Charge Janice K. Fedarcyk. “Contrary to his agreement and the law, Mr. Rubin shirked his responsibilities while defrauding taxpayers. Thankfully, this bid-rigging scheme, where Mr. Rubin decided the winners and losers, is over.”

“IRS is the federal agency responsible for compliance with tax laws applicable to the issuance of tax-exempt municipal bonds,” said Special Agent in Charge Charles R. Pine of the Internal Revenue Service-Criminal Investigation (IRS-CI) New York Field Office. “Today’s guilty pleas by David Rubin and CDR are the result of a coordinated effort by the Department of Justice and IRS-Criminal Investigation. Depriving municipalities of investment earnings and diverting arbitrage via illegal agreements and kickbacks will not be tolerated. IRS-Criminal Investigation agents will continue to investigate fraud in the municipal bond market and recommend prosecution against those who have participated in the fraudulent scheme.”

The bid–rigging conspiracy with which Rubin is charged carries a maximum penalty of 10 years in prison and a $1 million criminal fine.The fraud conspiracy with which Rubin is charged carries a maximum penalty of five years in prison and a $250,000 criminal fine.The wire fraud charge with which Rubin is charged carries a maximum penalty of 20 years in prison and a $250,000 criminal 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 criminal fine on the bid-rigging charge of $100 million. The fraud conspiracy and wire fraud offenses with which CDR is charged each carry a maximum criminal fine of $500,000. 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.

Rubin is the tenth individual to plead guilty in an ongoing federal investigation into the municipal bonds industry, which is being conducted by the Antitrust Division’s New York Field Office, the FBI and IRS-CI.
In addition, Dominick Carollo and Peter S. Grimm, formerly of GE Funding Capital Market Services, and Steven E. Goldberg, formerly of GE Funding Capital Market Services and FSA, were indicted on July 27, 2010, and are scheduled to begin trial in April 2012. Three former UBS employees, Peter Ghavami, Gary Heinz and Michael Welty, were indicted on Dec. 9, 2010.”

MANAGER OF HALFWAY HOUSE PLEADS GUILTY TO FRAUD RELATING TO ATC CORPORATION MEIDCARE FRAUD CASE

December 20, 2011

WASHINGTON – The manager and operator of a Fort Lauderdale, Fla.-area halfway house pleaded guilty yesterday for his role in a Medicare fraud kickback scheme that funneled patients to a fraudulent mental health provider, American Therapeutic Corporation (ATC), announced the Department of Justice, FBI and the Department of Health and Human Services (HHS).

Butler Moultrie, 46, pleaded guilty before U.S. Magistrate Judge Barry L. Garber in Miami to one count of conspiracy to commit health care fraud.

According to court documents, most of the residents at Moultrie’s halfway house were recovering from drug and/or alcohol addictions.   Nevertheless, Moultrie agreed to refer Medicare beneficiaries who resided at his halfway house to ATC purportedly to receive intensive mental health services called partial hospitalization program (PHP) treatment in exchange for illegal health care kickbacks.   Moultrie knew that such kickbacks were illegal, and he knew that ATC fraudulently billed the Medicare program for the PHP services.   Moultrie knew that no doctor had prescribed PHP treatment for his patient referrals, and he knew that his residents required drug and/or alcohol addiction treatment rather than mental health services.

According to court filings, ATC’s owners and operators paid kickbacks to owners and operators of assisted living facilities and halfway houses, including Moultrie, and to patient brokers in exchange for delivering ineligible patients to ATC and its related company, the American Sleep Institute (ASI).   In some cases, the patients received a portion of those kickbacks.  Throughout the course of the ATC conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries who did not qualify for PHP services.   The ineligible beneficiaries attended treatment programs that were not legitimate so that ATC and ASI could bill Medicare more than $200 million in medically unnecessary services.

According to the plea agreement, Moultrie’s participation in the fraud resulted in approximately $1.9 million in fraudulent billing to the Medicare program.  At sentencing, scheduled for Feb. 21, 2012, Moultrie faces a maximum of 10 years in prison and a $250,000 fine.

Robert and Nikki Jenkins, two other managers and operators of halfway houses in Fort Lauderdale, were sentenced yesterday for referring beneficiaries to ATC in exchange for health care kickbacks.   U.S. District Chief Judge Federico A. Moreno in Miami sentenced Robert Jenkins to 24 months in prison and Nikki Jenkins to 15 months in prison.   Another halfway house operator, Irene Trematerra, was sentenced last week by U.S. District Judge Ursula Ungaro to 18 months in prison for her role in providing beneficiaries to ATC in exchange for kickbacks.

ATC, its management company Medlink Professional Management Group Inc., and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, Medlink and ASI, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011.   ATC, Medlink and nine of the individual defendants have pleaded guilty or have been convicted at trial.  Other defendants are scheduled to begin trial on April 9, 2012, before U.S. District Judge Patricia A. Seitz.

The guilty plea and sentences were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.

These cases are being prosecuted by Trial Attorneys Steven Kim and Jennifer L. Saulino of the Criminal Division’s Fraud Section.  The cases were investigated by the FBI and HHS-OIG and were brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.

Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,140 defendants that collectively have billed the Medicare program for more than $2.9 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.”

TEXAS CORP. AND OFFICERS CHARGED WITH FRAUD BY SEC

The following excerpt is from the SEC website:

“The Securities and Exchange Commission today charged Texas-based financial services firm Life Partners Holdings, Inc. and three of its senior executives for their involvement in a fraudulent disclosure and accounting scheme involving life settlements.

Life Partners is a Nasdaq-traded company that generates virtually all of its revenues from brokering life settlements. Life settlements involve the purchase and sale of fractional interests of life insurance policies in the secondary market. In life settlement transactions, life insurance policy owners sell their policies to investors in exchange for a lump-sum payment. The dollar amount offered by the investor takes into account the insured’s life expectancy and the terms and conditions of the insurance policy.

The SEC alleges that Life Partners chairman and CEO Brian Pardo, president and general counsel Scott Peden, and chief financial officer David Martin misled shareholders by failing to disclose a significant risk to Life Partners’ business: the company was systematically and materially underestimating the life expectancy estimates it used to price transactions. Life expectancy estimates are a critical factor impacting the company’s revenues and profit margins as well as the company’s ability to generate profits for its shareholders.

The SEC further alleges that Life Partners and the three executives were involved in disclosure violations and improper accounting that Life Partners used to overvalue assets held on the company’s books and create the appearance of a steady stream of earnings from brokering life settlement transactions. The SEC further charged Pardo and Peden with insider trading in their shares of Life Partners stock while in possession of material, non-public information indicating that the company had systematically and materially underestimated life expectancy estimates.

According to the SEC’s complaint filed in federal district court in Waco, Texas, Life Partners misrepresented and failed to disclose in public filings with the Commission that the company’s systematic use of materially underestimated life expectancy estimates constituted a material risk to the company’s revenues. Beginning in 1999, the company used life expectancy estimates provided by Dr. Donald T. Cassidy, a Reno, Nev.-based doctor with no actuarial training or prior experience rendering life expectancy estimates. The SEC alleges that Life Partners and Pardo failed to conduct any meaningful due diligence on Cassidy’s qualification to act as a life expectancy underwriter and instructed the doctor to use a life expectancy methodology that was created by the company’s former underwriter, a part-owner of Life Partners. The SEC also alleges that Pardo, Peden and Martin were aware that the Cassidy-rendered life expectancy estimates were systematically and materially short.

The SEC alleges that Life Partners materially misstated net income from fiscal year 2007 through the third quarter of fiscal year 2011 by prematurely recognizing revenues and understating impairment expense related to its investments in life settlements. The SEC alleges that Life Partners improperly accelerated revenue recognition from the closing date to the date it obtained a non-binding agreement with the policy owner to sell a life settlement. Life Partners’ use of Cassidy’s life expectancy estimates as part of its impairment calculations caused the company to understate millions of dollars in impairment expense.

The SEC further alleges that during this time, Pardo and Peden sold approximately $11.5 million and $300,000 respectively of Life Partners stock at inflated prices while in possession of material non-public information about the company’s dependency on short life expectancy estimates to generate revenues.

The SEC has alleged Life Partners, Pardo, Peden and Martin committed direct violations or aided and abetted violations of Sections 10(b), 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, and 13a-13 thereunder. The SEC has also alleged that Life Partners, Pardo and Peden violated Section 17(a) of the Securities Act; that Life Partners, Pardo and Martin committed direct violations or aided and abetted violations of Section 13(b)(2)(B) of the Exchange Act; that Pardo, Peden and Martin violated Section 13(b)(5) of the Exchange Act and Rules 13b2-1 and 13b2-2(a) thereunder; that Pardo violated Rule 13b2-2(b) of the Exchange Act; and that Pardo and Martin violated Rule 13a-14 of the Exchange Act. The SEC’s complaint seeks repayment to the company of stock sales profits and bonuses received by Pardo and Martin pursuant to Section 304 of the Sarbanes Oxley Act of 2002.”

CEMENT COMPANY TO PAY $1.7 MILLION TO SETTLE CLEAN AR ACT ALLEGED VIOLATIONS

The following excerpt is from the EPA website:

“WASHINGTON – The U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice (DOJ) announced that Essroc Cement Company has agreed to pay a $1.7 million penalty and invest approximately $33 million in pollution control technology to resolve alleged violations of the Clean Air Act (CAA) at six of its Portland Cement manufacturing plants. The settlement will protect Americans’ health by reducing more than 7,000 tons of harmful nitrogen oxides (NOx) and sulfur dioxide (SO2) pollution each year that can lead to childhood asthma, acid rain, and smog. Essroc has also agreed to spend $745,000 to mitigate the effects of past excess emissions from its facilities.

“EPA is committed to cutting illegal air pollution from the largest sources of emissions,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “The pollution controls required by today’s settlement will reduce harmful air pollutants, protecting communities across the nation.”

“These comprehensive measures at multiple Essroc facilities will achieve substantial reductions in harmful air pollution and result in cleaner, healthier air for many people across the country,” said Ignacia S. Moreno, assistant attorney general for the Environment and Natural Resources Division of the Department of Justice. “This will bring Essroc into compliance with the nation’s Clean Air Act and marks significant progress in addressing the nation’s largest sources of air pollution, and protecting the most vulnerable among us, especially children and the elderly, from respiratory and other health problems.”

Under the settlement, Essroc will install state of the art pollution control technology to control SO2 and NOx at five of its plants and demonstrate a selective catalytic reduction system (SCR) system at two long wet kilns in its Logansport, Ind. plant. If successful, this will be the first SCRs used on long wet kilns anywhere in the world. Essroc will also permanently retire its sixth plant, located in Bessemer, Penn. This plant is currently out of operation and its permanent retirement will ensure that the facility does not restart without proper permitting under the CAA.

The settlement also requires Essroc to spend $745,000 on a mitigation project to replace old engines in several off-road vehicles at its plant sites. The replacement engines are estimated to achieve approximately a 50-80 percent reduction in nitrogen oxides in each engine.  

Reducing air pollution from cement plants is one of EPA’s National Enforcement Initiatives for 2011-2013. Sulfur dioxide and nitrogen oxides, two key pollutants emitted from cement plants, have numerous adverse effects on human health and are significant contributors to acid rain, smog, and haze. The pollutants are converted in the air into fine particles of particulate matter that can cause severe respiratory and cardiovascular impacts, and premature death. Reducing these harmful air pollutants will benefit the communities located near the Essroc plants, particularly communities disproportionately impacted by environmental risks and vulnerable populations, including children.

The states of Indiana and West Virginia, and the Commonwealths of Pennsylvania and Puerto Rico, are also signatories to this consent decree.

The settlement was lodged today in the U.S. District Court for the Western District of Pennsylvania, and is subject to a 30-day public comment period and final court approval.”

MUNICIPAL BOND COMPANY AND FOUNDER PLEAD GUILTY TO BID-RIGGING

 

The following excerpt is from the Department of Justice website:

"WASHINGTON – A Beverly Hills, Calif.,-based financial products and services firm, and its founder and owner pleaded guilty today in the Southern District of New York for their participation in bid-rigging and fraud conspiracies related to contracts for the investment of municipal bond proceeds and other related municipal finance contracts, the Department of Justice announced. 

Rubin/Chambers, Dunhill Insurance Services, also known as CDR Financial Products, and David Rubin, CDR founder and owner, pleaded guilty before U.S. District Judge Victor Marrero in the Southern District of New York.  Rubin and CDR, along with Zevi Wolmark, also known as Stewart Wolmark, the former chief financial officer and managing director of CDR, and Evan Andrew Zarefsky, a vice president of CDR, were indicted on Oct. 29, 2009.  The trial for Wolmark and Zarefsky is scheduled to begin on Jan. 3, 2012, in the Southern District of New York.

Rubin and CDR each pleaded guilty to participating in separate bid-rigging and fraud conspiracies with various financial institutions and insurance companies and their representatives.  These institutions and companies, or “providers,” offered a type of contract, known as an investment agreement, to state, county and local governments and agencies throughout the United States.  The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects.  Rubin and CDR also pleaded guilty to one count of wire fraud in connection with those schemes.

“Mr. Rubin and his company engaged in fraudulent and anticompetitive conduct that harmed municipalities and other public entities,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Justice Department’s Antitrust Division.  “Today’s guilty pleas are an important development in our continued efforts to hold accountable those who violate the antitrust laws and subvert the competitive process in our financial markets.”

According to court documents, CDR was hired by public entities that issue municipal bonds to act as their broker and conduct what was supposed to be a competitive bidding process for contracts for the investment of municipal bond proceeds.  Competitive bidding for those contracts is the subject of regulations issued by the U.S. Department of the Treasury and is related to the tax-exempt status of the bonds.

During his plea hearing, Rubin admitted that, from 1998 until 2006, he and other co-conspirators supplied information to providers to help them win bids, solicited intentionally losing bids, and signed certifications that contained false statements regarding whether the bidding process for certain investment agreements complied with relevant Treasury Regulations.  Additionally, Rubin admitted that he and other co-conspirators solicited fees from providers, which were in fact payments to CDR for rigging or manipulating bids for certain investment agreements so that a particular provider would win that agreement at an artificially determined price. 

“Mr. Rubin and his firm were trusted with public money and confidence to assist municipalities with issuing bonds,” said FBI Assistant Director in Charge Janice K. Fedarcyk.  “Contrary to his agreement and the law, Mr. Rubin shirked his responsibilities while defrauding taxpayers.  Thankfully, this bid-rigging scheme, where Mr. Rubin decided the winners and losers, is over.”

“ IRS is the federal agency responsible for compliance with tax laws applicable to the issuance of tax-exempt municipal bonds,” said Special Agent in Charge Charles R. Pine of the Internal Revenue Service-Criminal Investigation (IRS-CI) New York Field Office .  “Today’s guilty pleas by David Rubin and CDR are the result of a coordinated effort by the Department of Justice and IRS-Criminal Investigation.  Depriving municipalities of investment earnings and diverting arbitrage via illegal agreements and kickbacks will not be tolerated.  IRS-Criminal Investigation agents will continue to investigate fraud in the municipal bond market and recommend prosecution against those who have participated in the fraudulent scheme.”      

The bid–rigging conspiracy with which Rubin is charged carries a maximum penalty of 10 years in prison and a $1 million criminal fine.  The fraud conspiracy with which Rubin is charged carries a maximum penalty of five years in prison and a $250,000 criminal fine.  The wire fraud charge with which Rubin is charged carries a maximum penalty of 20 years in prison and a $250,000 criminal 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 criminal fine on the bid-rigging charge of $100 million.  The fraud conspiracy and wire fraud offenses with which CDR is charged each carry a maximum criminal fine of $500,000.  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.

Rubin is the tenth individual to plead guilty in an ongoing federal investigation into the municipal bonds industry, which is being conducted by the Antitrust Division’s New York Field Office, the FBI and IRS-CI. 

In addition, Dominick Carollo and Peter S. Grimm, formerly of GE Funding Capital Market Services, and Steven E. Goldberg, formerly of GE Funding Capital Market Services and FSA, were indicted on July 27, 2010, and are scheduled to begin trial in April 2012.  Three former UBS employees, Peter Ghavami, Gary Heinz and Michael Welty, were indicted on Dec. 9, 2010.

Today’s guilty pleas are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.  For more information about the task force, visit www.stopfraud.gov.

Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-335-8000, the FBI at 212-384-5000, or IRS-CI at 212-436-1761, or visit www.justice.gov/atr/contact/newcase.htm.