| NEW YORK, April 11
NEW YORK, April 11 A federal judge sentenced the
former chief financial officer of CDR Financial Products to 18
months in prison on Thursday for his role in a
multimillion-dollar, bid-rigging scheme in municipal bonds.
Zevi Wolmark, who used to work at the Los Angeles-based
financial services company, was also sentenced to two years of
supervised release and ordered to pay a $500,000 fine. Several
friends and family members of Wolmark, who has 10 children,
sobbed as Judge Harold Baer delivered the sentence in U.S.
District Court in Manhattan.
Wolmark, whom a prosecutor described as the "Number Two" man
in the scheme, told the judge before his sentencing that he was
"a very sorry and humble man....
"I want to apologize to the court for my role in rigging
bids," Wolmark said.
Baer also sentenced two other former employees of the
company for their roles in what he called "a fairly gigantic
Evan Zarefsky, formerly a vice president with the company,
was sentenced to eight months in prison, two years of supervised
release, and ordered to do six months of community service and
pay a $17,500 fine. Matthew Rothman was sentenced to six months
in prison and two years of supervised release, and ordered to
pay a $15,000 fine.
The charges stem from an investigation begun in 2006 by the
U.S. Treasury and Justice Departments and the Internal Revenue
Service into how municipalities award guaranteed investment
contracts, which are used to invest proceeds from bond sales.
UBS and JPMorgan Chase & Co entered into
non-prosecution agreements with the Justice Department in
connection with the investigation, while Banc of America
Securities settled with the U.S. Securities and Exchange
More than $743 million has been recovered from financial
institutions in the course of investigations, the SEC has said.
Both Wolmark and Zarefsky pleaded guilty last year to two
conspiracy charges and a charge of wire fraud. They admitted
that CDR and some of its employees accepted kickbacks from
financial institutions in exchange for CDR's help in awarding
municipal bond contracts without a true competitive bidding
Wolmark testified at a 2012 hearing that the scheme ran from
1998 through November 2006, while Zarefsky has said that his
involvement began soon after he joined the firm in 2000. The bid
manipulation led to inflated unearned fees for the company,
among other financial benefits, according to Wolmark.
The founder of CDR, David Rubin, is slated to be sentenced
on June 28. Rubin, whom prosecutors describe as the leader,
pleaded guilty in late 2011 to one count each of wire fraud,
conspiracy to restrain trade and conspiracy.
Lawyers for Wolmark, Zarefsky and Rothman either declined to
comment or could not be reached for comment.
The cases are: U.S.A. v. Rubin/Chambers et al., U.S.
District Court, Southern District of New York, No. 09-1058; and
USA. v. Matthew Adam Rothman, in the same court, No. 10-0029.