Three former UBS AG bankers were sentenced for deceiving US municipalities by rigging bids for contracts for investing proceeds of municipal bond sales.
Ex-UBS AG managing director Peter Ghavami and two former colleagues may be sentenced to a maximum prison time of 27 months, a fraction of what prosecutors had sought.
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Gary Heinz, a former bank vice president who was caught on recordings discussing the scheme, received the prison sentence of 27 months and was ordered Heinz to pay a us$400,000 fine by the US District Judge Kimba Wood.
Peter Ghavami, formerly global head of commodities in UBS, was sentenced to 18 months in prison and ordered to pay a US$1 million fine, while Michael Welty, a former vice president, was sentenced to 16 months and ordered to pay a US$300,000 fine.
In August, a jury found Ghavami and former colleagues Gary Heinz and Michael Welty guilty of wire-fraud conspiracy for rigging bids.
UBS agreed in 2011 to pay $160 million in restitution, penalties and disgorgement for the scheme.
Prosecutors have asked for sentences of at least 17 1/2 years for Ghavami, 19 1/2 years for Heinz and at least 11 1/4 years for Welty.
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By GlobalDataWood has cut the range of potential sentences for all three in US District Court in New York stating that their criminal behaviour was aberrational from their otherwise law-abiding lives, and because the victims have been ‘compensated highly’ by the UBS settlement.
Kalina Tulley, a lawyer at the Department of Justice’s antitrust division, said: These were municipalities that were looking to invest the taxpayers’ money. Tulley pleaded with Wood to no avail, in a courtroom filled with the bankers’ friends and families. These defendants abused that trust."
Ghavami will be deported to Belgium after serving his sentence at a low-security federal prison. Heinz and Welty will serve their sentences at a minimum security camp, an option not available to Ghavami because he is not a US citizen.
The trial followed a five-year federal antitrust probe into the US$3.7 trillion municipal bond market.
Scott D. Hammond, deputy assistant attorney general of the antitrust division’s criminal enforcement program, said: "For years, these executives corrupted the competitive bidding process and defrauded municipalities across the country for important public works projects. The division will continue to prosecute those who subvert and corrupt competitive markets for personal profit."
