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CDR Financial, Founder Rubin Plead Guilty in Municipal Bid-Rigging Probe

Rubin, 50, and his Beverly Hills, California-based firm were charged along with two other employees. Prosecutors said Rubin, who served as chief executive officer, took kickbacks for running sham auctions for investments.

He pleaded guilty along with the company today in Manhattan federal court. Jury selection in the trial of Rubin, former CDR Chief Financial Officer Z. Stewart Wolmark and Vice President Evan Zarefsky was set to begin next week. Rubin lost a bid two days ago to postpone the trial because his wife is in the final stages of terminal cancer.

Rubin, who sobbed at today’s plea hearing, will be sentenced April 27. His conviction is a victory for federal antitrust prosecutors in their five-year investigation of the $3.7 trillion municipal bond market.

Bank of America Corp., JPMorgan Chase & Co., UBS AG, Wells Fargo & Co. and General Electric Co. previously acknowledged that former employees engaged in illegal activity. The companies have paid $743 million in restitution and penalties.

Former Executives

So far, the Justice Department has filed charges against 18 former executives of financial-services firms. With Rubin, 10 have pleaded guilty.

A grand jury in New York in October 2010 indicted Rubin. The U.S. said the defendants conspired to rig bids on contracts with local governments to invest the proceeds of bond issues. The indictment alleged that CDR and its employees, who handled the bidding, chose firms to provide the contracts in advance in exchange for kickbacks.

U.S. prosecutors had amassed almost 800,000 tape recordings and 125 million pages of documents during a three-year investigation of CDR, defense lawyers said earlier this year.

Gail Rubin, Rubin’s wife of 26 years and the mother of his seven children, is in the final stages of pancreatic cancer in California, where they live, his lawyers said in papers filed with a federal appeals court in New York.

Rubin claimed his wife’s illness and concerns for his children would make it impossible for him to adequately participate in his defense.

The case is U.S. v. Rubin/Chambers, Dunhill Insurance Services Inc., 09-CR-01058, U.S. District Court, Southern District of New York (Manhattan).

 

(Bloombergnews)


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