You can now read 5 articles in a month for free on Read as much as you want anywhere and anytime for just 99¢.

CDR Financial founder pleads guilty to fraud

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.

Continue reading below

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.

Loading comments...
Want each day's news headlines delivered fresh to your
inbox every morning? Just connect with us
in one of the following ways:
Please enter a valid email will never post anything without asking.
Privacy Policy
Subscriber Log In

You have reached the limit of 5 free articles in a month

Stay informed with unlimited access to Boston’s trusted news source.

  • High-quality journalism from the region’s largest newsroom
  • Convenient access across all of your devices
  • Today’s Headlines daily newsletter
  • Subscriber-only access to exclusive offers, events, contests, eBooks, and more
  • Less than 25¢ a week
Marketing image of
Marketing image of