WASHINGTON - A politically connected financial firm and its founder pleaded guilty Friday to taking part in fraud and bid-rigging conspiracies related to the municipal bond business.
The Justice Department said CDR Financial Products Inc. of Beverly Hills, Calif., and owner David Rubin entered guilty pleas in federal court in Manhattan. The department said they acknowledged their roles in schemes designed to win contracts to invest the proceeds of municipal bonds issued by state, county and local governments.
Rubin faces up to 20 years in prison.
Two other CDR executives are scheduled to go on trial in New York next week.
CDR also was investigated for its ties to former New Mexico governor Bill Richardson and business the company won in that state. No charges grew out of that investigation.
Rubin is the 10th person to plead guilty to criminal charges in the ongoing federal investigation of the municipal bonds industry, the department said. Eight others have been charged, including the two CDR executives.
The government so far has recovered $743 million in restitution and penalties from Bank of America Corp., UBS AG, JPMorgan Chase and Co., GE Funding Capital Market Services Inc., and Wachovia Bank.
Municipal bonds are issued to build schools, hospitals, and roads in a $2.8 trillion market. About $100 billion of the proceeds from the bond sales each year are temporarily invested before being used for the original purpose of the sales.
In the CDR case, Rubin admitted that over eight years beginning in 1998, he provided information to financial institutions and insurance companies that helped win bids, intentionally solicited losing bids and paid kickbacks in what was supposed to be a competitive situation, the Justice Department said.