Three former UBS AG executives were convicted on Friday of conspiring to deceive US cities and towns by operating a scheme to rig bids to invest municipal bond proceeds. The verdict by a federal court jury in Manhattan is the latest victory for the US Department of Justice in its broad investigation of the $3.7 trillion US municipal bond market. The widespread probe has touched some of the world's largest banks.
The three defendants, Peter Ghavami, Gary Heinz and Michael Welty, were charged in 2010 as part of a probe focused on rooting out schemes to fix prices and rig bids on bond transactions. The former bankers denied wrongdoing and said government witnesses had lied to ensnare them.
Each defendant was found guilty on two counts of conspiracy. The jury also convicted Heinz and Welty on other charges, but found Welty not guilty on one wire-fraud count, and Heinz not guilty of witness tampering. Heinz was the only one of the three to face that charge.
Ghavami, a Belgian national, left UBS in 2007 as global head of commodities. Both Heinz, of Jersey City, New Jersey, and Welty, of New York, worked on UBS' municipal bond reinvestment and derivatives desk at the time of the suspected offenses. The two conspiracy charges involved rigging bids in 2001 and 2002 for guaranteed investment contracts, which cities and counties use to park proceeds from municipal bond sales. The conspiracy charges carry a maximum of five years in prison each. No sentencing date has been set.
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