| NEW YORK, March 12
NEW YORK, March 12 The head of a California
financial products brokerage who pleaded guilty to overseeing a
vast enterprise of bid-rigging for investment contracts for
municipal bond proceeds avoided prison Wednesday after
cooperating with authorities.
David Rubin, founder of CDR Financial Products Inc, pleaded
guilty in December 2011 to wire fraud and conspiracy charges
stemming from the scheme involving more than 200 investment
U.S. District Judge Kimba Wood in Manhattan sentenced Rubin
and also ordered him to pay up to $5.65 million. The judge chose
not to order a prison term, citing Rubin's cooperation and his
need to care for his wife while she undergoes chemotherapy.
"He is a significant cooperator who deserves leniency no
matter what," Wood said.
The financial penalty includes $2 million in fines and up to
$2.15 million in restitution. Rubin will also guarantee a $2
million fine levied against his defunct firm, which was based in
Beverly Hills, California.
Rubin, 52, was central in a wide-ranging probe of the $3.7
trillion U.S. municipal bond market. He admitted to taking part
in a conspiracy in which CDR and its executives took kickbacks
from investment managers in exchange for contracts to manage
funds from municipal debt sales. The scheme lasted from 1998
through 2006, prosecutors say.
"I have deep remorse and great regret for my actions," Rubin
said at Wednesday's hearing.
Rubin, who began cooperating with the government after his
plea, testified at the 2012 trial of three former UBS AG
bankers, including Peter Ghavami, who prosecutors said
had a "corrupt relationship" with the CDR founder.
Ghavami and the two other UBS bankers, Gary Heinz and
Michael Welty, were found guilty at trial and sentenced in July
to prison terms ranging from 16 to 27 months.
UBS meanwhile became one of five large financial
institutions that agreed to pay about $743 million in
restitution, disgorgement and penalties as a result of the
The other companies were Bank of America Corp,
JPMorgan Chase & Co, General Electric Co and
Wells Fargo & Co.
As a result of the probe, 17 individuals have been
convicted, including most recently a former Bank of America Corp
executive, Phillip Murphy, who pleaded guilty last month ahead
on the eve of trial.
Seven of those convictions included employees at CDR. Three
besides Rubin have already been sentenced. Zevi Wolmark, CDR's
former chief financial officer, landed the longest prison term
of the three at 18 months.
The Justice Department had also secured three other
convictions in 2012 following guilty verdicts in the case of
three former bankers at General Electric's GE Capital unit,
Steven Goldberg, Dominick Carollo and Peter Grimm.
But a federal appeals court vacated their convictions last
year, and they were released from prison on Nov. 27.
The case is U.S. v. Rubin/Chambers, Dunhill Insurance
Services, Inc, U.S. District Court, Southern District of New
York, No. 09-cr-01058.