April 20, 2021

3 Former UBS Bankers Sentenced for Bid-Rigging

Gary Heinz, 40, a former bank vice president who was caught on recordings discussing the scheme, received the longest prison sentence, a term of 27 months. Judge Kimba M. Wood of Federal District Court in Manhattan also ordered Mr. Heinz to pay a $400,000 fine.

Peter Ghavami, 45, who left UBS in 2007 as global head of commodities, was sentenced to 18 months in prison and ordered to pay a fine of $1 million. Michael Welty, 49, a former vice president, was sentenced to 16 months and ordered to pay a $300,000 fine.

“We’re very pleased at the outcome and we feel that justice was done,” said Charles A. Stillman, a lawyer for Mr. Ghavami.

Prosecutors said the bankers had steered financial contracts to their friends in exchange for kickbacks and other favors from 2001 to 2006, while falsely certifying that the processes were competitive.

A federal jury convicted all three former bankers last August of conspiring to defraud municipal bond issuers and also convicted Mr. Ghavami and Mr. Heinz of wire fraud. UBS agreed in 2011 to pay $160 million in restitution, penalties and disgorgement for the scheme.

Prosecutors had sought sentences of at least 19 and a half years for Mr. Heinz, at least 17 and a half years for Mr. Ghavami and at least 11 years and three months for Mr. Welty.

Judge Wood cut the range of potential sentences for all three on Wednesday, saying that their criminal behavior was aberrational from their otherwise law-abiding lives, and because the victims have been “compensated highly” by the UBS settlement.

Kalina M. Tulley, a lawyer at the Justice Department’s Antitrust Division, said Judge Wood’s reduction in sentencing ranges “greatly underestimates the seriousness of the offense.”

“These were municipalities that were looking to invest the taxpayers’ money,” Ms. Tulley pleaded with Judge Wood, to no avail, in a courtroom filled with the bankers’ friends and families. “These defendants abused that trust.”

Mr. Ghavami, a Belgian national, was the first of three former members of UBS’s municipal securities desk to be sentenced.

“I’ve always tried to conduct my life with integrity and consideration,” Mr. Ghavami told the judge before apologizing to affected municipalities and his wife, Julie, and daughter, Athena. “All I want to do is to protect Julie and Athena from harm and to get to the point where we can be a family again.”

Mr. Ghavami will be deported to Belgium after serving his sentence at a low-security federal prison. Mr. Heinz and Mr. Welty are eligible to serve their sentences at a minimum security camp, an option not available to Mr. Ghavami because he is not an American citizen.

The Justice Department charged Mr. Heinz, Mr. Ghavami and Mr. Welty in 2010 as part of its broad investigation of the $3.7 trillion municipal bond market, in which at least 19 people have been convicted or pleaded guilty.

“For years, these executives corrupted the competitive bidding process and defrauded municipalities across the country for important public works projects,” Scott D. Hammond, deputy assistant attorney general of the antitrust division’s criminal enforcement program, said in a statement after the sentencings. “The division will continue to prosecute those who subvert and corrupt competitive markets for personal profit.”


Article source: http://www.nytimes.com/2013/07/25/business/3-former-ubs-bankers-sentenced-for-bid-rigging.html?partner=rss&emc=rss

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