| NEW YORK
NEW YORK May 8 Two former employees of a
California brokerage who became cooperating witnesses in a broad
U.S. government investigation of bid-rigging in the $3.7
trillion municipal bond market avoided prison time at their
Dani Naeh, 47, and Douglas Goldberg, 42, both pleaded guilty
in 2010 to charges including conspiracy to restrain trade and
wire fraud arising out of their work at CDR Financial Products
Inc, once one of the largest U.S. brokers of municipal bond
proceed investment contracts.
During court hearings in Manhattan, U.S. District Judge
Harold Baer cited the long cooperation of the two former CDR
employees in sentencing them to no prison or probation time,
saying during Naeh's case that incarceration would "probably be
the wrong message."
Baer fined Naeh $100,000. He ordered no fine for Goldberg,
citing concerns about his net income.
"Sorry is not a strong enough word for how I feel," Goldberg
said at Thursday's hearing.
In pleading guilty, Naeh and Goldberg admitted to
participating in a conspiracy from 1998 to 2006 in which CDR
took kickbacks from investment managers in exchange for
contracts to manage funds from municipal debt sales.
Naeh and Goldberg began cooperating with investigators in
2007, helping prosecutors build a case against Beverly Hills,
California-based CDR and executives including David Rubin, its
Rubin and CDR pleaded guilty to wire fraud and conspiracy
charges in 2011 and agreed to cooperate in the probe. Rubin was
sentenced in March to two years of probation and ordered to pay
up to $5.65 million in fines and restitution.
Should he not pay the restitution, Baer said Thursday he may
require Naeh and Goldberg to share in that obligation.
Authorities obtained numerous convictions as a result of the
bid-rigging investigation, as well as $743 million in
settlements with Bank of America Corp, UBS AG,
General Electric Co, JPMorgan Chase & Co and Wells
Fargo & Co.
Naeh and Goldberg testified in the bid rigging trial of
three former bankers at General Electric's GE Capital unit,
Steven Goldberg, Dominick Carollo and Peter Grimm.
A federal jury convicted the GE executives in 2012. But an
appellate court vacated their convictions last year, and they
were released from prison on Nov. 27. The Justice Department is
seeking further appellate review of that ruling.
Goldberg also testified against three former UBS executives
-- Peter Ghavami, Gary Heinz and Michael Welty -- who were
convicted in 2012 for participating in frauds related to
municipal bond proceed contracts. Their appeal is
The cases in the U.S. District Court, Southern District of
New York, are U.S. v. Naeh, No. 10-cr-00139, and U.S. v.
Goldberg, No. 10-cr-00209.
(Reporting by Nate Raymond in New York; Editing by Noeleen
Walder and Andrew Hay)