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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK


UNITED STATES OF AMERICA,          

                  v.

DOMINICK P. CAROLLO,
STEVEN E. GOLDBERG, and
PETER S. GRIMM,

                    Defendants.


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10-CR-654

Filed: 7/27/10

Violations:
18 U.S.C. § 371
18 U.S.C. § 1343

JUDGE BAER

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: ________________
DATE FILED: 27 JUL 2010

 

 

 

 

Superseded on May 31, 2011

INDICTMENT

The Grand Jury charges:

COUNT ONE - WIRE FRAUD
(18 U.S.C. 1343)

1. DOMINICK P. CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM are hereby indicted and made defendants on the charges stated below:

THE RELEVANT PARTIES AND ENTITIES

2. During all times relevant to the Indictment, Provider B was a group ofseparate financial services companies located in New York, New York and was owned or controlled by a company headquartered in Fairfield, Connecticut. Provider B sold investment agreements and other municipal finance contracts through its business leaders and marketers, including DOMINICK P. CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM.

3. DOMINICK P. CAROLLO, a resident of Holmdel, New Jersey, worked at Provider B from approximately 1993 until at least November 2002. Defendant CAROLLO was a Business Leader at Provider B. CAROLLO worked in Provider B's offices in New York, New York and managed and supervised the day-to-day activities and personnel of Provider B's businesses involved in the sales of investment agreements and other municipal finance contracts.

4. STEVEN E. GOLDBERG, a resident of Glen Ridge, New Jersey, was employed by Provider B from approximately August 1999 until at least May 2001. Defendant GOLDBERG was a Liability Manager at Provider B, and worked in its offices in New York, New York, and reported to defendant CAROLLO. As a Liability Manager, defendant GOLDBERG had authority to and did submit bids for investment agreements and other municipal finance contracts on behalf of Provider B.

5. PETER S. GRIMM, a resident of Bloomfield, New Jersey, was employed by Provider B from approximately February 2000 until at least November 2006. Defendant GRIMM was a Liability Manager and a Vice President at Provider B. Defendant GRIMM worked at Provider B's offices in New York, New York, and, for a period of time, reported to defendant CAROLLO. As a Liability Manager and as a Vice President, GRIMM had authority to and did submit bids for investment agreements and other municipal finance contracts on behalf of Provider B.

6. During all times relevant to the Indictment, Rubin/Chambers, Dunhill Insurance Services, Inc. d\b\a Chambers, Dunhill, Rubin & Co. and CDR Financial Products, Inc., and certain of their employees (collectively "CDR"), located in Beverly Hills, California, marketed financial products and services, including services as a broker and advisor to various municipal issuers throughout the United States.

7. During all times relevant to the Indictment, Broker A, located in Pottstown, Pennsylvania, and certain of its employees or representatives (collectively "Broker A"), marketed financial products and services, including services as a broker and advisor to various municipal issuers throughout the United States.

8. During all times relevant to the Indictment, Broker B was the North American division of a foreign financial services company that had offices in New York, New York, and marketed financial products and services, including services as a broker and advisor to various municipal issuers throughout the United States. During all times relevant to the Indictment, Company B, a company incorporated in Florida, and its agents (collectively "Company B"), marketed financial products and services, including serving as Broker B's bidding agent, to various municipal issuers throughout the United States (Broker B and Company B hereinafter collectively "Broker B")

9. During all times relevant to the Indictment, Broker C, and its principal (collectively "Broker C'), was located in Great Neck, New York and marketed its services as a broker to various municipal issuers throughout the United States.

10. During all times relevant to the Indictment, Financial Institution A was a financial institution that was a branch or agency of a foreign bank within the meaning of Title 18, United States Code, Section 20.

11. During all times relevant to the Indictment, Broker D was a financial products and services subsidiary of Financial Institution A located in New York, New York.Broker D and certain of its employees (collectively "Broker D") marketed financial products and services, including services as a broker and advisor to various municipal issuers throughout the United States.

12. Whenever in this Count reference is made to any act, deed, or transaction of any corporation, such allegation shall be deemed to mean that the corporation engaged in such act, deed, or transaction by or through its officers, directors, agents, employees, or other representatives while they were actively engaged in the management, direction, control, or transaction of its business affairs.

BACKGROUND

13. Municipal bonds are issued by government entities, such as states, counties, and cities, or quasi-governmental entities, such as public authorities and school, utility or water districts, to raise money for operating funds or for specific projects, such as the construction of public facilities, and to refinance outstanding municipal debt. In some instances, the entity issuing the bond turns the money over to a not-for-profit entity, such as a school or hospital, or to an entity that will spend the money for a specific public purpose, such as the construction of low-cost housing or waste treatment facilities. Both the entities that issue municipal bonds and the entities that receive and spend the money are, unless otherwise stated, collectively referred to herein as "issuers," "municipal issuers," or "municipalities." In 2007 and 2008, combined, approximately $800 billion in municipal bonds were issued in the United States.

14. The money an issuer raises from a municipal bond offering ("bond proceeds") is typically spent over a period of time rather than immediately, in one lump sum. The issuer frequently invests some or all of the bond proceeds in an investment product (sometimes referred to as an "investment agreement") that is designed for its specific needs. Investment agreements vary in size from a few hundred thousand to several hundred million dollars, and in duration from as short as one month to as long as thirty years.

15. Major financial institutions, including banks, investment banks, insurance companies, and financial services companies (collectively "providers") sell investment agreements and other municipal finance contracts through their employees or agents.

16. Issuers usually select providers of investment agreements through bona fide competitive bidding procedures that are designed to comply with federal tax law and United States Department of the Treasury regulations relating to the tax-exempt status of municipal bonds. Compliance with these regulations is monitored by the Internal Revenue Service ("IRS"), which is entitled to receive a portion of the earnings from a municipality's investment agreement under certain circumstances. Among other things, each provider submitting a bid typically certifies that specific Treasury regulations have been followed, including that the provider did not consult with any other potential provider about its bid and that all providers had an equal opportunity to bid, commonly referred to as the no "last looks" provision.

17. Issuers often hire third parties ("brokers") to act as their agents in conducting a bona fide competitive bidding process and complying with the relevant Treasury regulations. The broker's fee for conducting a bona fide competitive bidding process is generally paid by the winning provider, which takes account of the cost of such broker's fee when calculating its bid and generally discloses the fee to the issuer.

18. A provider usually becomes aware of an upcoming bid from a broker. In some cases, the broker decides which providers will be solicited to bid without consulting with the issuer or any of the other professional representatives advising the issuer. A provider typically receives a bid package from the broker, usually via e-mail. A typical bid package contains, among other things, the bid specifications, which detail the type of investment agreement or other municipal finance contract for which bids are being solicited, the date and time of the bid, and under what circumstances the bid will take place. A typical package also requires each provider that submits a bid to make certain representations, including that a bona fide bid was conducted and that the bidding process conformed to the relevant Treasury regulations. A provider usually submits its bid to the broker orally over the telephone at a time identified in the bid specifications, and then sends a conforming copy of the bid via facsimile to the broker.

19. After reviewing the bids to ensure conformity with the specifications, the broker informs the issuer of the outcome of the bid, including the identity of the winning, qualified bidder and, if appropriate, any conditions that deviate from the specifications. Brokers are often required by issuers to provide written certification that the bidding procedures complied with the relevant Treasury regulations.

20. Depending on the structure of the bid, providers may be asked to quote only the interest rate to be paid on funds on deposit for the duration of the agreement or they may be asked to submit a bid in the form of a dollar amount or date (sometimes referred to as the "price" or "price level" of a bid). In a typical investment agreement, providers are asked to quote only an interest rate and, generally, the agreement is awarded to the provider quoting the highest rate.

21. Many brokers that conduct bona fide competitive bidding for investment agreements subject to the Treasury regulations also are hired by municipal issuers and other quasi-governmental entities to conduct bona fide competitive bidding in connection with the award of other contracts involving public funds, even though those contracts are not subject to the Treasury regulations. These contracts (collectively, "other municipal finance contracts"), include, but are not limited to, investment agreements for taxable municipal bonds; investment agreements for funds borrowed by entities in which the federal government or any municipal entity is a participant; and derivative contracts, which are contracts between a municipal issuer and a financial institution that are designed to manage or transfer some or all of the interest rate risk associated with a municipal bond issue. They do not include underwriting contracts.

DESCRIPTION OF THE OFFENSE

22. From as early as 1999 until at least 2006, in the Southern District of New York and elsewhere, DOMINICK CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and other persons known and unknown, unlawfully, willfully, and knowingly, devised and intended to devise a scheme and artifice to defraud municipal issuers and to obtain money and property from these municipal issuers by means of false and fraudulent pretenses, representations, and promises, namely, a scheme to deprive municipal issuers of money by causing them to award investment agreements and other municipal finance contracts through multiple brokers including CDR, Broker A, Broker B, Broker C, Broker D and others known and unknown, at artificially determined or suppressed rates, and to deprive municipal issuers of the property right to control their assets by causing them to make economic decisions based on false and misleading information, and for the purposes of executing such scheme and artifice, and attempting to do so, did transmit and cause to be transmitted by means of wire, radio, or television communication in interstate commerce, writings, signs, signals, pictures, or sounds the following:

23. Among other things, in furtherance of this scheme and artifice, on or about February 23, 2006, via interstate wire transfer from New York, New York to Missouri, Provider B made an interest payment of approximately $57,567.39 to a state health and educational authority, which payment was artificially determined and suppressed because at the time of bidding for that investment agreement, defendant GRIMM used information he obtained from CDR relating to the bids of other providers to determine Provider B's bid. As a result, Provider B was awarded the agreement.

IN VIOLATION OF TITLE 18, UNITED STATES CODE, SECTION 1343

COUNT TWO - CONSPIRACY
(18 U.S.C. 371)

The Grand Jury further charges:

THE RELEVANT PARTIES AND ENTITIES

24. DOMINICK P. CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM are hereby indicted and made defendants on the charges stated below:

25. Paragraphs 2 through 6 and 12 through 21 of Count One of the Indictment are repeated, re-alleged, and incorporated in Count Two as if fully set forth below.

26. Various persons and entities, not made defendants herein, participated as co-conspirators in the offense charged herein and performed acts and made statements in furtherance thereof, including Provider B and CDR.

DESCRIPTION OF THE OFFENSE

27. From as early as August 1999 until at least November 2006, the exact dates being unknown to the Grand Jury, in the Southern District of New York and elsewhere, DOMINICK P. CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and co-conspirators, including Provider B and CDR, and others known and unknown, unlawfully, willfully, and knowingly did combine, conspire, confederate, and agree together and with each other to commit offenses against the United States, to wit, to violate Title 18, United States Code, Section 1343, and to defraud the United States and an agency thereof, to wit, the Internal Revenue Service ("IRS") of the United States Department of the Treasury, all in violation of Title 18, United States Code, Section 371.

28. It was a part and an object of the conspiracy that DOMINICK P. CAROLLO, STEVEN E. GOLDBERG, and PETER S. GRIMM and co-conspirators, including Provider B and CDR, and others known and unknown, unlawfully, willfully, and knowingly would and did devise and intend to devise a scheme and artifice to defraud municipal issuers and to obtain money and property from municipal issuers by means of false and fraudulent pretenses, representations, and promises, namely a scheme to deprive municipal issuers of money by causing them to award investment agreements and other municipal finance contracts at artificially determined or suppressed rates, and to deprive the municipal issuers of the property right to control their assets by causing them to make economic decisions based on false and misleading information, and for purposes of executing such scheme and artifice, and attempting to do so, would and did transmit and cause to be transmitted by means of wire, radio or television communication in interstate or foreign commerce any writings, signs, signals, pictures or sounds, in violation of Title 18, United States Code, Section 1343.

29. It was further a part and an object of the conspiracy that DOMINICK P. CAROLLO, STEVEN E. GOLDBERG, and PETER S. GRIMM and co-conspirators, including Provider B and CDR, and others known and unknown, would and did defraud the United States of America and the IRS by impeding, impairing, obstructing, and defeating the lawful government functions of the IRS in the ascertainment, computation, assessment, and collection of revenue due and owing from municipal issuers and in exercising its responsibilities to monitor compliance with Treasury regulations related to tax-exempt municipal bonds, in violation of Title 18, United States Code, Section 371.

THE MANNER AND MEANS BY WHICH THE
CONSPIRACY WAS CARRIED OUT

The manner and means by which the conspiracy was sought to be accomplished included, among others, the following:

30. Through the control and manipulation of bidding for investment agreements and other municipal finance contracts, DOMINICK P. CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and their co-conspirators, including Provider B and CDR, and others known and unknown, attempted to increase the number and profitability of investment agreements and other municipal finance contracts awarded to Provider B by municipal issuers that used CDR as their broker.

31. For purposes of effectuating the aforesaid conspiracy, DOMINICK P. CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and their co-conspirators, including Provider B and CDR, and others known and unknown, did those things which they conspired to do, including among other things:

    (a) discussing and agreeing with CDR which of Provider B's competitors should and should not be solicited to submit bids for a particular investment agreement or other municipal finance contract;

    (b) obtaining from CDR information about the prices, price levels, rates, conditions or other information related to competing providers' bids, including, in some instances, the exact price, price level or rate of competing providers' bids;

    (c) determining Provider B's bids after obtaining information from CDR about the prices, price levels, rates, conditions, or other information related to competing providers' bids;

    (d) submitting and arranging to be submitted, intentionally losing bids for certain investment agreements or other municipal finance contractsbrokered by CDR to make it appear that Provider B had competed for those agreements or contracts, when, in fact, it had not;

    (e) agreeing to pay and arranging for kickback payments to be made to CDR, in the form of fees that were inflated, relative to the services performed, or unearned. These payments were made in exchange for CDR's assistance in controlling and manipulating the competitive bidding process and were not disclosed to the municipal issuers that hired CDR or to the IRS;

    (f) misrepresenting to municipal issuers or bond counsel that the bidding process was bona fide and in compliance with Treasury regulations or was otherwise competitive;

    (g) certifying, causing to be certified, and forwarding certifications to municipal issuers or bond counsel stating that the bidding process for certain investment agreements or other municipal finance contracts was bona fide and in compliance with Treasury regulations or was otherwise competitive, when, in fact, it was not;

    (h) causing municipal issuers to award investment agreements and other municipal finance contracts to Provider B, which agreements and contracts the municipal issuers would not have awarded to Provider B if they had true and accurate information regarding the bidding process;

    (i) enabling Provider B to perform investment agreements or other municipal finance contracts at artificially determined or suppressed rates that deprived and will continue to deprive municipal issuers of money and property; and

    (j) causing municipal issuers not to file required reports with the IRS or to file inaccurate reports with the IRS, and, on occasion, to fail to give the IRS or the United States Treasury money to which it was entitled, thus jeopardizing the tax-exempt status of the underlying bonds.

OVERT ACTS

32. In furtherance of the conspiracy and to effect the illegal objects thereof, DOMINICK P. CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and their co-conspirators, including Provider B and CDR, and others known and unknown, committed or caused to be committed the following overt acts, among others, in the Southern District of New York and elsewhere:

    (a) on numerous occasions, at or about the time bids were due, the defendants and co-conspirators participated in telephone calls with CDR during which the defendants obtained information about the prices, price levels, rates, conditions or other information related to competing providers' bids. The defendants used this information to determine Provider B's bids. On some occasions, the defendants obtained the exact prices, price levels, rates, conditions or other information related to competing providers' bids from CDR and used that information to lower Provider B's bid and still win the contract. As a result of this control and manipulation of the bidding process, Provider B was awarded, has performed, and is scheduled to continue to perform investment agreements and other municipal finance contracts at artificially determined or suppressed levels that deprived and will continue to deprive municipal issuers of money and property;

    (b) on numerous occasions, at or about the time bids were due, defendants and co-conspirators participated in telephone calls and other wire transmissions during which the defendants agreed to, and did, submit intentionally losing bids for investment agreements and other municipal finance contracts. CDR sometimes provided the defendants with the prices, price levels, rates, conditions or other information related to competing providers' bids to assist them in preparing such intentionally losing bids;

    (c) on occasion, the defendants and co-conspirators participated in telephone calls during which they discussed, made or sought to make arrangements for CDR to receive kickbacks;

    (d) on numerous occasions, the defendants and co-conspirators misrepresented to municipal issuers or their bond counsel the circumstances under which investment agreements and other municipal finance contracts were bid;

    (e) on numerous occasions, the defendants and co-conspirators certified, caused to be certified, or forwarded certifications to municipal issuers or their bond counsel stating that the bidding process for certain investment agreements or other municipal finance contracts was bona fide and in compliance with Treasury regulations or was otherwise competitive, when, in fact, it was not;

    (f) on numerous occasions, Provider B performed investment agreements or other municipal finance contracts and made payments to municipal issuers via interstate wire transfer at artificially determined or suppressed rates. Provider B continues to perform some of these agreements and contracts; and

    (g) with respect to the award and performance of an investment agreement for a state housing agency, defendant GRIMM and co-conspirators, including Provider B and CDR, committed the following overt acts, among others:

      (i) on or about May 19, 2004, during a telephone call on the day before bids were due, CDR suggested to defendant GRIMM that he could lower the rate Provider B was preparing to bid because the state housing agency would have to give any money it earned at the higher rate to the IRS;

      (ii) on or about May 20, 2004, during a telephone call on the day bids were due, defendant GRIMM checked with CDR to confirm that a bid at the suppressed rate previously suggested by CDR would be the winning bid. GRIMM caused Provider B to submit a bid at the suppressed rate and Provider B was awarded the contract; and

      (iii) beginning in approximately July 2004, Provider B made scheduled interest payments via interstate wire transfer to the state housing agency at a rate defendant GRIMM caused to be artificially determined and suppressed, which payments continued until approximately November 1, 2005.

IN VIOLATION OF TITLE 18, UNITED STATES CODE, SECTION 371

 

COUNT THREE - CONSPIRACY
(18 U.S.C. 371)

The Grand Jury further charges:

THE RELEVANT PARTIES AND ENTITIES

33. DOMINICK P. CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM are hereby indicted and made defendants on the charges stated below:

34. Paragraphs 2 through 5, 7, and 12 through 21 of Count One of the Indictment are repeated, re-alleged, and incorporated in Count Three as if fully set forth below.

35. During all times relevant to the Indictment, Provider A was a group of related financial services companies located in New York, New York that sold investment agreements and other municipal finance contracts through its employees or agents, including defendant GOLDBERG.

36. From approximately May 2001 until at least 2006, defendant GOLDBERG was a vice president or Director at Provider A and worked at its offices in New York, New York. Defendant GOLDBERG had authority to and did submit bids for investment agreement or other municipal finance contracts for Provider A.

37. Various persons and entities, not made defendants herein, participated as co-conspirators in the offense charged herein and performed acts and made statements in furtherance thereof, including Provider B and Broker A.

DESCRIPTION OF THE OFFENSE

38. From as early as October 1999until at least November 2006, the exact dates being unknown to the Grand Jury, in the Southern District of New York and elsewhere, DOMINICK P. CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and co-conspirators, including Provider B and Broker A, and others known and unknown, unlawfully, willfully, and knowingly did combine, conspire, confederate, and agree together and with each other to commit offenses against the United States, to wit, to violate Title 18, United States Code, Section 1343, and to defraud the United States and an agency thereof, to wit, the Internal Revenue Service ("IRS") of the United States Department of the Treasury, all in violation of Title 18, United States Code, Section 371.

39. It was a part and an object of the conspiracy that DOMINICK P. CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and co-conspirators, including Provider B and Broker A, and others known and unknown, unlawfully, willfully, and knowingly would and did devise and intend to devise a scheme and artifice to defraud municipal issuers and to obtain money and property from municipal issuers by means of false and fraudulent pretenses, representations, and promises, namely a scheme to deprive municipal issuers of money by causing them to award investment agreements and other municipal finance contracts at artificially determined or suppressed rates, and to deprive the municipal issuers of the property right to control their assets by causing them to make economic decisions based on false and misleading information, and for purposes of executing such scheme and artifice, and attempting to do so, would and did transmit and cause to be transmitted by means of wire, radio or television communication in interstate or foreign commerce any writings, signs, signals, pictures or sounds, in violation of Title 18, United States Code, Section 1343.

40. It was further a part and an object of the conspiracy that DOMINICK P. CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and co-conspirators, including Provider B and Broker A, and others known and unknown, would and did defraud the United States and the IRS by impeding, impairing, obstructing, and defeating the lawful government functions of the IRS in the ascertainment, computation, assessment, and collection of revenue due and owing from municipal issuers and in exercising its responsibilities to monitor compliance with Treasury regulations related to tax-exempt municipal bonds, in violation of Title 18, United States Code, Section 371.

THE MANNER AND MEANS BY WHICH THE
CONSPIRACY WAS CARRIED OUT

The manner and means by which the conspiracy was sought to be accomplished included, among others, the following:

41. Through the control and manipulation of bidding for investment agreements and other municipal finance contracts, DOMINICK P. CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and co-conspirators, including Provider B and Broker A, and others known and unknown, attempted to increase the number and profitability of investment agreements and other municipal finance contracts awarded to Provider B by municipal issuers that used Broker A as their broker.

42. For purposes of effectuating the aforesaid conspiracy, DOMINICK P. CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and co-conspirators, including Provider B and Broker A, and others known and unknown, did those things which they conspired to do, including among other things:

    (a) discussing and agreeing with Broker A which of Provider B's competitors should and should not be solicited to submit bids for a particular investment agreement or other municipal finance contract;

    (b) obtaining from Broker A information about the prices, price levels, rates, conditions or other information related to competing providers' bids, including, in some instances, the exact price, price level or rate of competing providers' bids;

    (c) determining Provider B's bids after obtaining information from Broker A about the prices, price levels, rates, conditions, or other information related to competing providers' bids;

    (d) submitting and arranging to be submitted, intentionally losing bids for certain investment agreements or other municipal finance contractsbrokered by Broker A to make it appear that Provider B had competed for those agreements or contracts, when, in fact, it had not;

    (e) agreeing to pay and arranging for kickback payments to be made to Broker A, in the form of fees that were inflated, relative to the services performed, or unearned. These payments were made in exchange for Broker A's assistance in controlling and manipulating the competitive bidding process and were not disclosed to the municipal issuers that hired Broker A or to the IRS;

    (f) misrepresenting to municipal issuers or bond counsel that the bidding process was bona fide and in compliance with Treasury regulations or was otherwise competitive;

    (g) certifying, causing to be certified, and forwarding certifications to municipal issuers or bond counsel stating that the bidding process for certain investment agreements or other municipal finance contracts was bona fide and in compliance with Treasury regulations or was otherwise competitive, when, in fact, it was not;

    (h) causing municipal issuers to award investment agreements and other municipal finance contracts to Provider B, which agreements and contracts the municipal issuers would not have awarded to Provider B if they had true and accurate information regarding the bidding process;

    (i) enabling Provider B to perform investment agreements or other municipal finance contracts at artificially determined or suppressed rates that deprived and will continue to deprive municipal issuers of money and property; and

    (j) causing municipal issuers not to file required reports with the IRS or to file inaccurate reports with the IRS and, on occasion, to fail to give the IRS or the United States Treasury money to which it was entitled, thus jeopardizing the tax-exempt status of the underlying bonds.

OVERT ACTS

43. In furtherance of the conspiracy and to effect the illegal objects thereof, DOMINICK P. CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and co-conspirators, including Provider B and Broker A, and others known and unknown, committed or caused to be committed the following overt acts, among others, in the Southern District of New York and elsewhere:

    (a) on numerous occasions, at or about the time bids were due, the defendants participated in telephone calls with Broker A during which they obtained information about the prices, price levels, rates, conditions or other information related to competing providers' bids. The defendants used this information to determine Provider B's bids. On some occasions, the defendants obtained the exact prices, price levels, rates, conditions or other information related to competing providers' bids from Broker A and used that information to lower Provider B's bid and still win the contract. As a result of this control and manipulation of the bidding process, Provider B was awarded, has performed, and is scheduled to continue to perform investment agreements and other municipal finance contracts at artificially determined or suppressed levels that deprived and will continue to deprive municipal issuers of money and property;

    (b) on numerous occasions, at or about the time bids were due, the defendants and co-conspirators participated in telephone calls and other wire transmissions during which the defendants agreed to submit, and did submit, intentionally losing bids for investment agreements and other municipal finance contracts. The defendants sometimes were provided with the prices, price levels, rates, conditions or other information related to competing providers' bids to assist them in preparing such intentionally losing bids;

    (c) on occasion, the defendants and co-conspirators participated in telephone calls during which they discussed, made or sought to make arrangements for Provider B to pay Broker A kickbacks;

    (d) on numerous occasions, the defendants and co-conspirators misrepresented to municipal issuers or their bond counsel the circumstances under which the investment agreements and other municipal finance contracts were bid;

    (e) on numerous occasions, the defendants and co-conspirators certified, caused to be certified, and forwarded certifications to municipal issuers or their bond counsel stating that the bidding process for certain investment agreements or other municipal finance contracts was bona fide and in compliance with Treasury regulations or was otherwise competitive, when, in fact, it was not;

    (f) on numerous occasions, Provider B performed investment agreements or other municipal finance contracts and made payments to municipal issuers via wire transfer at artificially determined or suppressed rates. Provider B continues to perform some of these agreements and contracts;

    (g) with respect to the award and performance of an investment agreement for two funds for a state university, defendant GRIMMand co-conspirators, including Provider B and Broker A, committed the following overt acts, among others:

      (i) on or about March 18, 2002, during a telephone call between defendant GRIMM and Broker A on the day bids were due, Broker A requested and GRIMM agreed to "back off" his bids on the investment agreement so that defendant GOLDBERG, then employed at Provider A, could win. In return, Broker A promised GRIMM that Broker A would "find you another one soon . . . where I will ask him not to sharpen his pencil quite so-." Broker A told GRIMM that he "was hoping we could work something out here" and that Broker A could "work something with you on something else coming up." Broker A explained that he would "rather have each of you make some money alternatively." GRIMM agreed, saying "ok, I mean, if you are asking me to back off, I don't mind." Broker A then provided GRIMM with specific rates to bid to give Provider A "a little breathing room." GRIMM then reduced the rates he was otherwise prepared to bid so that Provider A would win the investment agreement; and

      (ii) on or about March 18, 2002, during a telephone call between defendants GRIMM and GOLDBERG, GRIMM told GOLDBERG that he "owed him lunch" because Broker A "asked me to back off my number . . . so that you can win both" funds; and

    (h) with respect to the award and performance of an investment agreement for a state housing and finance association, defendant GRIMM and co-conspirators, including Broker A, committed the following overt acts, among others:

      (i) on or about January 10, 2002, during a telephone call prior to the time bids were due, Broker A suggested to defendant GRIMM that he could lower the rate GRIMM was preparing to bid on behalf of Provider B and still win the contract;

      (ii) on or about January 10, 2002, defendant GRIMM submitted a bid to the state housing and finance association at a suppressed rate in accordance with Broker A's suggestion and Provider B was awarded the contract; and

      (iii) Provider B has made scheduled interest payments via interstate wire transmissions to the state housing and finance association at artificially determined and suppressed rates, including a payment of approximately $55,652.43 on or about June 30, 2006.

IN VIOLATION OF TITLE 18, UNITED STATES CODE, SECTION 371

COUNT FOUR - CONSPIRACY
(18 U.S.C. 371)

The Grand Jury further charges:

THE RELEVANT PARTIES AND ENTITIES

44. DOMINICK P. CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM are hereby indicted and made defendants on the charges stated below:

45. Paragraphs 2 through 5, 8, and 12 through 21 of Count One of the Indictment are repeated, re-alleged, and incorporated in Count Four as if fully set forth below.

46. Various persons and entities, not made defendants herein, participated as co-conspirators in the offense charged herein and performed acts and made statements in furtherance thereof, including Provider B and Broker B.

DESCRIPTION OF THE OFFENSE

47. From as early as August 1999until at least November 2006, the exact dates being unknown to the Grand Jury, in the Southern District of New York and elsewhere, DOMINICK P. CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and co-conspirators, including Provider B and Broker B, and others known and unknown, unlawfully, willfully, and knowingly did combine, conspire, confederate, and agree together and with each other to commit offenses against the United States, to wit, to violate Title 18, United States Code, Section 1343, and to defraud the United States and an agency thereof, to wit, the Internal Revenue Service ("IRS") of the United States Department of the Treasury, all in violation of Title 18, United States Code, Section 371.

48. It was a part and an object of the conspiracy that DOMINICK P. CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and co-conspirators, including Provider B and Broker B, and others known and unknown, unlawfully, willfully, and knowingly would and did devise and intend to devise a scheme and artifice to defraud municipal issuers and to obtain money and property from municipal issuers by means of false and fraudulent pretenses, representations, and promises, namely a scheme to deprive municipal issuers of money by causing them to award investment agreements and other municipal finance contracts at artificially determined or suppressed rates, and to deprive the municipal issuers of the property right to control their assets by causing them to make economic decisions based on false and misleading information, and for purposes of executing such scheme and artifice, and attempting to do so, would and did transmit and cause to be transmitted by means of wire, radio or television communication in interstate or foreign commerce any writings, signs, signals, pictures or sounds, in violation of Title 18, United States Code, Section 1343.

49. It was further a part and an object of the conspiracy that DOMINICK P. CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and co-conspirators, including Provider B and Broker B, and others known and unknown, would and did defraud the United States of America and the IRS by impeding, impairing, obstructing, and defeating the lawful government functions of the IRS in the ascertainment, computation, assessment, and collection of revenue due and owing from municipal issuers and in exercising its responsibilities to monitor compliance with Treasury regulations related to tax-exempt municipal bonds, in violation of Title 18, United States Code, Section 371.

THE MANNER AND MEANS BY WHICH THE
CONSPIRACY WAS CARRIED OUT

The manner and means by which the conspiracy was sought to be accomplished included, among others, the following:

50. Through the control and manipulation of bidding for investment agreements and other municipal finance contracts, DOMINICK P. CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and co-conspirators, including Provider B and Broker B, and others known and unknown, attempted to increase the number and profitability of investment agreements and other municipal finance contracts awarded to Provider B by the municipal issuers that used Broker B as their broker.

51. For purposes of effectuating the aforesaid conspiracy, DOMINICK P. CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and co-conspirators, including Provider B and Broker B, and others known and unknown, did those things which they conspired to do, including among other things:

    (a) discussing and agreeing with Broker B which of Provider B's competitors should and should not be solicited to submit bids for a particular investment agreement or other municipal finance contract;

    (b) obtaining from Broker B information about the prices, price levels, rates, conditions or other information related to competing providers' bids, including, in some instances, the exact price, price level or rate of competing providers' bids;

    (c) determining Provider B's bids after obtaining information from Broker B about the prices, price levels, rates, conditions, or other information related to competing providers' bids;

    (d) submitting and arranging to be submitted, intentionally losing bids for certain investment agreements or other municipal finance contractsbrokered by Broker Bto make it appear that Provider B had competed for those agreements or contracts, when, in fact, it had not;

    (e) agreeing to pay and paying Company B kickbacks in exchange for the control and manipulation of the competitive bidding process by Broker B, acting through its agent Company B. Provider B paid the kickbacks by hiring Company B in connection with transactions known as swaps between one or more financial institutions and paying "swap fees" to Company B. Some of the swap fees were inflated, relative to the services performed, or unearned, and none of the swap fees were disclosed to municipal issuers that hired Broker B or to the IRS;

    (f) misrepresenting to municipal issuers or bond counsel that the bidding process was bona fide and in compliance with Treasury regulations or was otherwise competitive;

    (g) certifying, causing to be certified, and forwarding certifications to municipal issuers or bond counsel stating that the bidding process for certain investment agreements or other municipal finance contracts was bona fide and in compliance with Treasury regulations or was otherwise competitive, when, in fact, it was not;

    (h) causing municipal issuers to award investment agreements and other municipal finance contracts to Provider B, which agreements and contracts the municipal issuers would not have awarded to Provider B if they had true and accurate information regarding the bidding process;

    (i) enabling Provider B to perform investment agreements or other municipal finance contracts at artificially determined or suppressed rates that deprived and will continue to deprive municipal issuers of money and property; and

    (j) causing municipal issuers not to file required reports with the IRS or to file inaccurate reports with the IRS, and on occasion, to fail to give the IRS or the United States Treasury money to which it was entitled, thus jeopardizing the tax-exempt status of the underlying bonds.

OVERT ACTS

52. In furtherance of the conspiracy and to effect the illegal objects thereof, DOMINICK P. CAROLLO, STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and co-conspirators, including Provider B and Broker B, and others known and unknown, committed or caused to be committed the following overt acts, among others, in the Southern District of New York and elsewhere:

    (a) on numerous occasions, at or about the time bids were due, the defendants and co-conspirators participated in telephone calls with Broker B during which they obtained information about the prices, price levels, rates, conditions or other information related to competing providers' bids. The defendants used this information to determine Provider B's bids. On some occasions, the defendants obtained the exact prices, price levels, rates, conditions or other information related to competing providers' bids from Broker B and used that information to lower Provider B's bid and still win the contract. As a result of this control and manipulation of the bidding process, Provider B was awarded, has performed, and is scheduled to continue to perform investment agreements and other municipal finance contracts at artificially determined or suppressed levels that deprived and will continue to deprive municipal issuers of money or property;

    (b) on numerous occasions, at or about the time bids were due, the defendants participated in telephone calls and other wire transmissions, during which defendants agreed to, and did, submit intentionally losing bids for investment agreements and other municipal finance contracts. Broker B sometimes provided the defendants with the prices, price levels, rates, conditions or other information related to competing providers' bids to assist them in preparing such intentionally losing bids;

    (c) on occasion, the defendants and co-conspirators participated in telephone calls during which they discussed, made or sought to make arrangements for Company B to receive kickbacks;

    (d) on numerous occasions, the defendants and co-conspirators misrepresented to municipal issuers or their bond counsel the circumstances under which investment agreements and other municipal finance contracts were bid;

    (e) on numerous occasions, the defendants and co-conspirators certified, caused to be certified, and forwarded certifications to municipal issuers or their bond counsel stating that the bidding process for certain investment agreements or other municipal finance contracts was bona fide and in compliance with Treasury regulations or was otherwise competitive, when, in fact, it was not;

    (f) on numerous occasions, Provider B performed investment agreements or other municipal finance contracts and made payments to municipal issuers via wire transfer at artificially determined or suppressed rates. Provider B continues to perform some of these agreements and contracts; and

    (g) with respect to the award and performance of an investment agreement for a state environmental improvement and energy authority, defendants CAROLLO, GOLDBERG, GRIMM and co-conspirators, including Broker B, committed the following overt acts, among others:

      (i) on or about November 1, 2000, during a telephone call on the day bids were due, Broker B told defendant GOLDBERG that he would give GOLDBERG information about bids submitted by other providers to enable GOLDBERG to submit a winning bid on behalf of Provider B;

      (ii) on or about November 1, 2000, during a telephone call on the day bids were due, Broker B suggested that defendant GOLDBERG reduce the rates he initially was prepared to bid on two of the three funds being bid. GOLDBERG agreed to submit a bid at the rates suggested by Broker B and Provider B was awarded the investment agreement;and

      (iii) beginning in approximately late 2000, via interstate wire transfer, Provider B made semi-annual interest payments to a state environmental improvement and energy authority at rates that were artificially determined and suppressed, including a payment on one of the funds of approximately $35,361.20 on or about June 30, 2006.

IN VIOLATION OF TITLE 18, UNITED STATES CODE, SECTION 371

 

COUNT FIVE - CONSPIRACY
(18 U.S.C. 371)

The Grand Jury further charges:

THE RELEVANT PARTIES AND ENTITIES

53. STEVEN E. GOLDBERG and PETER S. GRIMM are hereby indicted and made defendants on the charge stated below:

54. Paragraphs 2, 4, 9 and 12 through 21 of Count One and Paragraphs 35 and 36 of Count Three of the Indictment are repeated, re-alleged, and incorporated in Count Five as if fully set forth below.

55. Various persons and entities, not made defendants herein, participated as co-conspirators in the offense charged herein and performed acts and made statements in furtherance thereof, including Provider B and Broker C.

DESCRIPTION OF THE OFFENSE

56. From as early as December 1999 until at least November 2006, the exact dates being unknown to the Grand Jury, in the Southern District of New York and elsewhere, STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and co-conspirators, including Provider B and Broker C, and others known and unknown, unlawfully, willfully, and knowingly did combine, conspire, confederate, and agree together and with each other to commit offenses against the United States, to wit, to violate Title 18, United States Code, Section 1343, and to defraud the United States and an agency thereof, to wit, the Internal Revenue Service ("IRS") of the United States Department of the Treasury, all in violation of Title 18, United States Code, Section 371.

57. It was a part and an object of the conspiracy that STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and co-conspirators, including Provider B and Broker C, and others known and unknown, unlawfully, willfully, and knowingly would and did devise and intend to devise a scheme and artifice to defraud municipal issuers and to obtain money and property from municipal issuers by means of false and fraudulent pretenses, representations, and promises, namely a scheme to deprive municipal issuers of money by causing them to award investment agreements and other municipal finance contracts at artificially determined or suppressed rates, and to deprive the municipal issuers of the property right to control their assets by causing them to make economic decisions based on false and misleading information, and for purposes of executing such scheme and artifice, and attempting to do so, would and did transmit and cause to be transmitted by means of wire, radio or television communication in interstate or foreign commerce any writings, signs, signals, pictures or sounds, in violation of Title 18, United States Code, Section 1343.

58. It was further a part and an object of the conspiracy that STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and co-conspirators, including Provider B and Broker C, and others known and unknown, would and did defraud the United States of America and the IRS by impeding, impairing, obstructing, and defeating the lawful government functions of the IRS in the ascertainment, computation, assessment, and collection of revenue due and owing from municipal issuers and in exercising its responsibilities to monitor compliance with Treasury regulations related to tax-exempt municipal bonds, in violation of Title 18, United States Code, Section 371.

THE MANNER AND MEANS BY WHICH THE
CONSPIRACY WAS CARRIED OUT

The manner and means by which the conspiracy was sought to be accomplished included, among others, the following:

59. Through the control and manipulation of bidding for investment agreements and other municipal finance contracts, STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and co-conspirators, including Provider B and Broker C, and others known and unknown, attempted to increase the number and profitability of investment agreements and other municipal finance contracts awarded to Provider B by municipal issuers that used Broker C as their broker.

60. For purposes of effectuating the aforesaid conspiracy, STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and co-conspirators, including Provider B and Broker C, and others known and unknown, did those things which they conspired to do, including among other things:

    (a) obtaining from Broker C information about the prices, price levels, rates, conditions or other information related to competing providers' bids, including, in some instances, the exact price, price level or rate of competing providers' bids;

    (b) determining Provider B's bids after obtaining information from Broker C about the prices, price levels, rates, conditions, or other information related to competing providers' bids;

    (c) submitting and arranging to be submitted, intentionally losing bids for certain investment agreements or other municipal finance contracts brokered by Broker C to make it appear that Provider B had competed for those agreements or contracts, when, in fact, it had not;

    (d) misrepresenting to municipal issuers or bond counsel that the bidding process was bona fide and in compliance with Treasury regulations or was otherwise competitive;

    (e) certifying, causing to be certified, and forwarding certifications to municipal issuers or bond counsel stating that the bidding process for certain investment agreements or other municipal finance contracts was bona fide and in compliance with Treasury regulations or was otherwise competitive, when, in fact, it was not;

    (f) causing municipal issuers to award investment agreements and other municipal finance contracts to Provider B, which agreements and contracts the municipal issuers would not have awarded to Provider B if they had true and accurate information regarding the bidding process;

    (g) enabling Provider B to perform investment agreements or other municipal finance contracts at artificially determined or suppressed rates that deprived and will continue to deprive municipal issuers of money and property; and

    (h) causing municipal issuers not to file required reports with the IRS or to file inaccurate reports with the IRS, and on occasion, to fail to give the IRS or the United States Treasury money to which it was entitled, thus jeopardizing the tax-exempt status of the underlying bonds.

OVERT ACTS

61. In furtherance of the conspiracy and to effect the illegal objects thereof, STEVEN E. GOLDBERG and PETER S. GRIMM, the defendants, and co-conspirators, including Provider B and Broker C, and others known and unknown, committed or caused to be committed the following overt acts, among others, in the Southern District of New York and elsewhere:

    (a) on numerous occasions, at or about the time bids were due, the defendants participated in telephone calls with Broker C during which they obtained information about the prices, price levels, rates, conditions or other information related to competing providers' bids. The defendants used this information to determine Provider B's bids. On some occasions, the defendants obtained the exact prices, price levels, rates, conditions or other information related to competing providers' bids from Broker C and used that information to lower Provider B's bid and still win the contract. As a result of this control and manipulation of the bidding process, Provider B was awarded, has performed, and is scheduled to continue to perform investment agreements and other municipal finance contracts at artificially determined or suppressed levels that deprived and will continue to deprive municipal issuers of money or property;

    (b) on numerous occasions, at or about the time bids were due, the defendants and co-conspirators participated in telephone calls and other wire transmissions with Broker C during which the defendants agreed to, and did submit intentionally losing bids for investment agreements and other municipal finance contracts. The defendants sometimes were provided with the prices, price levels, rates, conditions or other information related to competing providers' bids to assist them in preparing such intentionally losing bids;

    (c) on numerous occasions, the defendants and co-conspirators misrepresented to municipal issuers or their bond counsel the circumstances under which investment agreements and other municipal finance contracts were bid;

    (d) on numerous occasions, the defendants and co-conspirators certified, caused to be certified, and forwarded certifications to municipal issuers or their bond counsel stating that the bidding process complied with Treasury regulations or was otherwise competitive, when, in fact, it was not;

    (e) on numerous occasions, Provider B performed investment agreements or other municipal finance contracts and made payments to municipal issuers via interstate wire transfer at artificially determined or suppressed rates. Provider B continues to perform some of these agreements and contracts;

    (f) with respect to the award and performance of an investment agreement for a state housing finance agency, defendant GRIMM and co-conspirators, including Provider B and Broker C, committed the following overt acts, among others:

      (i) on or about November 20, 2001, during a telephone call between defendants GRIMM and GOLDBERG, then employed at Provider A, GRIMM stated that he had heard from Broker C that GOLDBERG wanted to "call in" a favor that GRIMM owed GOLDBERG in connection with a prior bid. GRIMM asked GOLDBERG if he was "calling in his favor" and offered to "back off" the bid rate defendant GRIMM was prepared to submit on behalf of Provider B. GOLDBERG told GRIMM he would "let him know" on the day bids were due;

      (ii) on or about November 26, 2001, during a telephone call between defendants GRIMM and GOLDBERG on the day bids were due, GRIMM again offered to "back off," the agreement and GOLDBERG agreed. GRIMM replied that he would "take it easy today" on his bid; and

      (iii) on or about November 26, 2001, during a telephone call between defendants GRIMM and GOLDBERG at the time bids were due, GRIMM provided GOLDBERG with Provider B's exact bid rate and other information concerning the bid and GOLDBERG used this information to determine Provider A's bid. As a result, Provider A was awarded this investment agreement at an artificially determined and suppressed rate; and

    (g) with respect to the award and performance of an investment agreement for a state housing finance agency, defendant GRIMM and co-conspirators committed the following overt acts, among others:

      (i) on or about February 21, 2002, during a telephone call prior to the time bids were due, Broker C stated that defendant GRIMM could lower the rates Provider B was prepared to bid and still win the contract;

      (ii) on or about February 21, 2002, defendant GRIMM submitted Provider B's bid to the state housing finance agency at artificially determined and suppressed rates in accordance with Broker C's suggestion, and Provider B was awarded the contract; and

      (iii) beginning in approximately December 2002, via interstate wire transfer, Provider B made scheduled interest payments via interstate wire to a state housing finance agency at an artificially determined or suppressed rate, including a payment of approximately $31,029.75 on or about June 29, 2006.

IN VIOLATION OF TITLE 18, UNITED STATES CODE, SECTION 371

 

COUNT SIX - CONSPIRACY
(18 U.S.C. 371)

The Grand Jury further charges:

THE RELEVANT PARTIES AND ENTITIES

62. PETER S. GRIMM is hereby indicted and made a defendant on the charges stated below.

63. Paragraphs 2, 4, and 10 through 21 of Count One of the Indictment are repeated, re-alleged, and incorporated in Count Six as if fully set forth below.

64. Various persons and entities, not made defendants herein, participated as co-conspirators in the offense charged herein and performed acts and made statements in furtherance thereof, including Provider B, Broker D and Financial Institution A.

DESCRIPTION OF THE OFFENSE

65. From as early as January 2002 until at least November 2006, the exact dates being unknown to the Grand Jury, in the Southern District of New York and elsewhere, PETER S. GRIMM, the defendant, and co-conspirators, including Provider B, Broker D and Financial Institution A, and others known and unknown, unlawfully, willfully, and knowingly did combine, conspire, confederate, and agree together and with each other to commit offenses against the United States, to wit, to violate Title 18, United States Code, Sections 1343 and 1005, and to defraud the United States and an agency thereof, to wit, the Internal Revenue Service ("IRS") of the United States Department of the Treasury, all in violation of Title 18, United States Code, Section 371.

66. It was a part and an object of the conspiracy that PETER S. GRIMM, the defendant, and co-conspirators, including Provider B, Broker D and Financial Institution A, and others known and unknown, unlawfully, willfully, and knowingly would and did devise and intend to devise a scheme and artifice to defraud municipal issuers and to obtain money and property from municipal issuers by means of false and fraudulent pretenses, representations, and promises, namely a scheme to deprive municipal issuers of money by causing them to award investment agreements and other municipal finance contracts at artificially determined or suppressed rates, and to deprive the municipal issuers of the property right to control their assets by causing them to make economic decisions based on false and misleading information, and for purposes of executing such scheme and artifice, and attempting to do so, would and did transmit and cause to be transmitted by means of wire, radio or television communication in interstate or foreign commerce any writings, signs, signals, pictures or sounds, in violation of Title 18, United States Code, Section 1343.

67. It was further a part and an object of the conspiracy that PETER S. GRIMM, the defendant, and co-conspirators, including Provider B, Broker D and Financial Institution A, and others known and unknown, would and did defraud the United States and the IRS by impeding, impairing, obstructing, and defeating the lawful government functions of the IRS in the ascertainment, computation, assessment, and collection of revenue due and owing from municipal issuers and in exercising its responsibilities to monitor compliance with Treasury regulations related to tax-exempt municipal bonds, in violation of Title 18, United States Code, Section 371.

68. It was further a part and an object of the conspiracy that PETER S. GRIMM, the defendant, and co-conspirators, including Provider B, Broker D and Financial Institution A, and others known and unknown, with intent to defraud the United States and any agency thereof, to wit, the United States Department of the Treasury and the IRS, pursuant to the scheme identified in this Count, participated, shared in and received (directly or indirectly) money, profit, property and benefits, to wit, one or more kickbacks identified in this Count, through transactions, commissions, contracts and any other acts of a financial institution, to wit, Financial Institution A, in violation of Title 18, United States Code, Section 1005.

THE MANNER AND MEANS BY WHICH THE
CONSPIRACY WAS CARRIED OUT

The manner and means by which the conspiracy was sought to be accomplished included, among others, the following:

69. Through the control and manipulation of bidding for investment agreements and other municipal finance contracts, PETER S. GRIMM, the defendant, and co-conspirators, including Provider B, Broker D and Financial Institution A, and others known and unknown, attempted to increase the number and profitability of investment agreements and other municipal finance contracts awarded to Provider B by municipal issuers that used Broker D as their broker.

70. For purposes of effectuating the aforesaid conspiracy, PETER S. GRIMM, the defendant, and co-conspirators, including Provider B, Broker D and Financial Institution A, and others known and unknown,, did those things which they conspired to do, including among other things:

    (a) discussing and agreeing with Broker D which of Provider B's competitors should and should not be solicited to submit bids for a particular investment agreement or other municipal finance contract;

    (b) obtaining from Broker D information about the prices, price levels, rates, conditions or other information related to competing providers' bids, including, in some instances, the exact price, price level or rate of competing providers' bids;

    (c) determining Provider B's bids after obtaining information from Broker D about the prices, price levels, rates, conditions, or other information related to competing providers' bids;

    (d) submitting and arranging to be submitted, intentionally losing bids for certain investment agreements or other municipal finance contracts brokered by Broker D to make it appear that Provider B had competed for those agreements or contracts, when, in fact, it had not;

    (e) agreeing to pay and arranging for kickbacks to be paid to Financial Institution A, whereby Provider B entered into swaps with Financial Institution A at inflated rates, thereby generating increased revenue for Financial Institution A. These kickbacks were in exchange for Broker D's assistance in controlling and manipulating the competitive bidding process and were not disclosed to the municipal issuers that hired Broker D or to the IRS;

    (f) misrepresenting to municipal issuers or bond counsel that the bidding process was bona fide and in compliance with Treasury regulations or was otherwise competitive;

    (g) certifying, causing to be certified, and forwarding certifications to municipal issuers or bond counsel stating that the bidding process for certain investment agreements or other municipal finance contracts was bona fide and in compliance with Treasury regulations or was otherwise competitive, when, in fact, it was not;

    (h) causing municipal issuers to award investment agreements and other municipal finance contracts to Provider B, which agreements and contracts the municipal issuers would not have awarded to Provider B if they had true and accurate information regarding the bidding process;

    (i) enabling Provider B to perform investment agreements or other municipal finance contracts at artificially determined or suppressed rates that deprived and will continue to deprive municipal issuers of money and property; and

    (j) causing municipal issuers not to file required reports with the IRS or to file inaccurate reports with the IRS and, on occasion, to fail to give the IRS or the United States Treasury money to which it was entitled, thus jeopardizing the tax-exempt status of the underlying bonds.

OVERT ACTS

71. In furtherance of the conspiracy and to effect the illegal objects thereof, PETER S. GRIMM, the defendant, and co-conspirators, including Provider B, Broker D and Financial Institution A, and others known and unknown, committed or caused to be committed the following overt acts, among others, in the Southern District of New York and elsewhere:

    (a) on numerous occasions, at or about the time bids were due, the defendant and co-conspirators participated in telephone calls with Broker D during which he obtained information about the prices, price levels, rates, conditions or other information related to competing providers' bids. The defendant used this information to determine Provider B's bids. On some occasions, the defendant obtained the exact prices, price levels, rates, conditions or other information related to competing providers' bids from Broker D and used that information to lower Provider B's bid and still win the contract. As a result of this control and manipulation of the bidding process, Provider B was awarded, has performed, and is scheduled to continue to perform investment agreements and other municipal finance contracts at artificially determined or suppressed levels that deprived and will continue to deprive municipal issuers of money and property;

    (b) on numerous occasions, at or about the time bids were due, the defendant and co-conspirators participated in telephone calls and other wire transmissions with Broker D during which defendant agreed to submit intentionally losing bids for investment agreements and other municipal finance contracts. Broker D sometimes provided the defendant with the prices, price levels, rates, conditions or other information related to competing providers' bids to assist him in preparing such intentionally losing bids;

    (c) on numerous occasions, the defendant and co-conspirators participated in telephone calls with Broker D during which they discussed, made or sought to make arrangements for Broker D to receive kickbacks;

    (d) on numerous occasions, the defendant and co-conspirators misrepresented to municipal issuers or their bond counsel the circumstances under which investment agreements and other municipal finance contracts were bid;

    (e) on numerous occasions, the defendant and co-conspirators certified, caused to be certified, and forwarded certifications to municipal issuers or their bond counsel, stating that the bidding process for certain investment agreements or other municipal finance contracts was bona fide and in compliance with Treasury regulations or was other competitive, when, in fact, it was not;

    (f) on numerous occasions, Provider B performed investment agreements or other municipal finance contracts and made payments to municipal issuers via interstate wire transfer at artificially determined or suppressed rates. Provider B continues to perform some of these agreements and contracts; and

    (g) with respect to the award and performance of an investment agreement for a state educational assistance foundation, defendant GRIMM and co-conspirators, including Provider B and Broker D, committed or caused to be committed the following overt acts, among others:

      (i) on or about December 5, 2002, during a telephone call between defendant GRIMM and Broker D, Broker D suggested to GRIMM that he could lower Provider B's rates and still be awarded the contract;

      (ii) on or about December 5, 2002, defendant GRIMM submitted Provider B's bid in accordance with Broker D's suggestion and Provider B was awarded the contract; and

      (iii) Provider B made scheduled payments via interstate wire transfer to a state educational assistance foundation at artificially determined and suppressed rates, including a payment of approximately $43,442.04 on or about November 1, 2006.

IN VIOLATION OF TITLE 18, UNITED STATES CODE, SECTION 371.

 

COUNT SEVEN - WIRE FRAUD
(18 U.S.C. 1343)

The Grand Jury further charges:

THE RELEVANT PARTIES AND ENTITIES

72. STEVEN E. GOLDBERG is hereby indicted and made a defendant on the charges stated below:

73. Paragraphs 6 through 10 and 12 through 21 of Count One and Paragraphs 35 and 36 of the Indictment are repeated, re-alleged and incorporated in Count Seven as if fully set forth below.

DESCRIPTION OF THE OFFENSE

74. From as early as 2001 until at least 2006, in the Southern District of New York and elsewhere, STEVEN E. GOLDBERG, the defendant, and others known and unknown, unlawfully, willfully and knowingly, while an employee at Provider A, devised and intending to devise a scheme and artifice to defraud municipal issuers, and to obtain money and property from these municipal issuers by means of false and fraudulent pretenses, representations and promises, namely, a scheme to deprive municipal issuers of money by causing them to award investment agreements and other municipal finance contracts through multiple brokers including CDR, Broker A, Broker B, Broker C and others known and unknown, at artificially determined or suppressed rates, and to deprive municipal issuers of the property right to control their assets by causing them to make economic decisions based on false and misleading information, and for purposes of executing such scheme and artifice, and attempting to do so, did transmit and cause to be transmitted by means of wire, radio, television communication in interstate commerce writings, signs, signals, pictures, or sounds the following:

75. Among other things, in furtherance of this scheme and artifice, on or about August 8, 2005, via interstate wire transfer from London, England to Beverly Hills, California, at the direction of defendant GOLDBERG, Financial Institution A paid a $55,000 kickback to CDR on behalf of Provider A in connection with an investment agreement that GOLDBERG fraudulently caused a state building authority to award to his employer, Provider A, at rates that were artificially determined or suppressed because GOLDBERG used information he obtained from CDR relating to the bids of other providers to determine Provider A's bid.

IN VIOLATION OF TITLE 18, UNITED STATES CODE, SECTION 1343

 

COUNT EIGHT - CONSPIRACY
(18 U.S.C. 371)

The Grand Jury further charges:

THE RELEVANT PARTIES AND ENTITIES

76. STEVEN E. GOLDBERG is hereby indicted and made a defendant on the charge stated below.

77. Paragraphs 6, 10, and 12 through 21 of Count One and Paragraphs 35 and 36 of Count Three of the Indictment are repeated, re-alleged, and incorporated in Count Eight as if fully set forth below.

78. During all times relevant to the Indictment, Financial Institution B was a financial institution that was a branch or agency of a foreign bank within the meaning of Title 18, United States Code, Section 20.

79. Various persons and entities, not made defendants herein, participated as co-conspirators in the offense charged herein and performed acts and made statements in furtherance thereof, including Provider A, CDR, Financial Institution A and Financial Institution B.

DESCRIPTION OF THE OFFENSE

80. From as early as August 2001 until at least November 2006, the exact dates being unknown to the Grand Jury, in the Southern District of New York and elsewhere, STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and CDR, and others known and unknown, unlawfully, willfully, and knowingly did combine, conspire, confederate, and agree together and with each other to commit offenses against the United States, to wit, to violate Title 18, United States Code, Sections 1343 and 1005, and to defraud the United States and an agency thereof, to wit, the Internal Revenue Service ("IRS") of the United States Department of the Treasury, all in violation of Title 18, United States Code, Section 371.

81. It was a part and an object of the conspiracy that STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and CDR, and others known and unknown, unlawfully, willfully, and knowingly would and did devise and intend to devise a scheme and artifice to defraud municipal issuers and to obtain money and property from municipal issuers by means of false and fraudulent pretenses, representations, and promises, namely a scheme to deprive municipal issuers of money by causing them to award investment agreements and other municipal finance contracts at artificially determined or suppressed rates, and to deprive the municipal issuers of the property right to control their assets by causing them to make economic decisions based on false and misleading information, and for purposes of executing such scheme and artifice, and attempting to do so, would and did transmit and cause to be transmitted by means of wire, radio or television communication in interstate or foreign commerce any writings, signs, signals, pictures or sounds, in violation of Title 18, United States Code, Section 1343.

82. It was further a part and an object of the conspiracy that STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and CDR, and others known and unknown, would and did defraud the United States of America and the IRS by impeding, impairing, obstructing, and defeating the lawful government functions of the IRS in the ascertainment, computation, assessment, and collection of revenue due and owing from municipal issuers and in exercising its responsibilities to monitor compliance with Treasury regulations related to tax-exempt municipal bonds, in violation of Title 18, United States Code, Section 371.

83. It was further a part and an object of the conspiracy that STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and CDR, and others known and unknown, with intent to defraud the United States and any agency thereof, to wit, the United States Department of the Treasury and the IRS, pursuant to the scheme identified in this Count, participated, shared in and received (directly or indirectly) money, profit, property and benefits, to wit, one or more kickbacks identified in this Count, through transactions, commissions, contracts and any other acts of a financial institution, to wit, Financial Institution A and Financial Institution B, in violation of Title 18, United States Code, Section 1005.

THE MANNER AND MEANS BY WHICH THE
CONSPIRACY WAS CARRIED OUT

The manner and means by which the conspiracy was sought to be accomplished included, among others, the following:

84. Through the control and manipulation of bidding for investment agreements and other municipal finance contracts, STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and CDR, and others known and unknown, attempted to increase the number and profitability of investment agreements and other municipal finance contracts awarded to Provider A by the municipal issuers that used CDR as their broker.

85. For purposes of effectuating the aforesaid conspiracy, STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and CDR, and others known and unknown, did those things which they conspired to do, including among other things:

    (a) discussing and agreeing with CDR which of Provider A's competitors should and should not be solicited to submit bids for a particular investment agreement or other municipal finance contract;

    (b) obtaining from CDR information about the prices, price levels, rates, conditions or other information related to competing providers' bids, including, in some instances, the exact price, price level or rate of competing providers' bids;

    (c) determining Provider A's bids after obtaining information from CDR about the prices, price levels, rates, conditions, or other information related to competing providers' bids;

    (d) submitting and arranging to be submitted, intentionally losing bids for certain investment agreements or other municipal finance contractsbrokered by CDR to make it appear that Provider A had competed for those agreements or contracts, when, in fact, it had not;

    (e) agreeing to pay and arranging for kickback payments to be made to CDR by Financial Institution A or Financial Institution B in the form of fees that were inflated, relative to the services performed, or unearned. These payments were made in exchange for CDR's assistance in controlling and manipulating the competitive bidding process and were not disclosed to the municipal issuers that hired CDR or to the IRS;

    (f) misrepresenting to municipal issuers or bond counsel that the bidding process was bona fide and in compliance with Treasury regulations or was otherwise competitive;

    (g) certifying, causing to be certified, and forwarding certifications to municipal issuers or bond counsel stating that the bidding process for certain investment agreements or other municipal finance contracts was bona fide and in compliance with Treasury regulations or was otherwise competitive, when, in fact, it was not;

    (h) causing municipal issuers to award investment agreements and other municipal finance contracts to Provider A, which agreements and contracts the municipal issuers would not have awarded to Provider A if they had true and accurate information regarding the bidding process;

    (i) enabling Provider A to perform investment agreements or other municipal finance contracts at artificially determined or suppressed rates that deprived and will continue to deprive municipal issuers of money and property; and

    (j) causing municipal issuers not to file required reports with the IRS or to file inaccurate reports with the IRS and, on occasion, to fail to give the IRS or the United States Treasury money to which it was entitled, thus jeopardizing the tax-exempt status of the underlying bonds.

    OVERT ACTS

86. In furtherance of the conspiracy and to effect the illegal objects thereof, STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and CDR, and others known and unknown, committed or caused to be committed the following overt acts, among others, in the Southern District of New York and elsewhere:

    (a) on numerous occasions, at or about the time bids were due, the defendant and co-conspirators participated in telephone calls with CDR during which defendant obtained information about the prices, price levels, rates, conditions or other information related to competing providers' bids. The defendant used this information to determine Provider A's bids. On some occasions, the defendant obtained the exact prices, price levels, rates, conditions or other information related to competing providers' bids from CDR and used that information to lower Provider A's bid and still win the contract. As a result of this control and manipulation of the bidding process, Provider A was awarded, has performed, and is scheduled to continue to perform investment agreements and other municipal finance contracts at artificially determined or suppressed levels that deprived and will continue to deprive municipal issuers of money and property;

    (b) on numerous occasions, at or about the time bids were due, the defendant and co-conspirators participated in telephone calls and other wire transmissions during which the defendant agreed to, and did, submit intentionally losing bids for investment agreements and other municipal finance contracts. CDR sometimes provided the defendant with the prices, price levels, rates, conditions or other information related to competing providers' bids to assist him in preparing such intentionally losing bids;

    (c) on occasion, the defendant and co-conspirators, including Financial Institution A and Financial Institution B, participated in telephone calls during which they discussed, made or sought to make arrangements for CDR to receive kickbacks;

    (d) on numerous occasions, the defendant and co-conspirators misrepresented to municipal issuers or their bond counsel the circumstances under which investment agreements and other municipal finance contracts were bid;

    (e) on numerous occasions, the defendant and co-conspirators certified, caused to be certified, and forwarded certifications to municipal issuers or their bond counsel stating that the bidding process for certain investment agreements or other municipal finance contracts was bona fide and in compliance with Treasury regulations or was otherwise competitive, when, in fact, it was not;

    (f) on numerous occasions, Provider A performed investment agreements or other municipal finance contracts and made payments to municipal issuers via interstate wire transfer at artificially determined or suppressed rates. Provider A continues to perform some of these agreements and contracts; and

    (g) with respect to the award and performance of an investment agreement for a municipal port facility, the defendant and co-conspirators, including Provider A, CDR and Financial Institution A, committed the following overt acts, among others:

      (i) on or about September 26, 2002, during a telephone call about an hour before the bids were due, defendant GOLDBERG spoke with CDR about the arrangements for Provider A to pay CDR kickbacks and to enter into one or more financial transactions known as swaps with Financial Institution A;

      (ii) on or about September 26, 2002, during a telephone call at about the time that bids were due, defendant GOLDBERG obtained information from CDR about the bids submitted by three other providers and agreed on the rate Provider A would bid and the amount of the kickback CDR would receive;

      (iii) on or about September 30, 2002, on behalf of Provider A, Financial Institution A paid a kickback to CDR in the amount of approximately $25,000; and

      (iv) beginning approximately in May 2003, Provider A made semi-annual interest payments via interstate wire to the municipal port facility at a rate that was artificially determined, which payments continued until at least October 2006;

IN VIOLATION OF TITLE 18, UNITED STATES CODE, SECTION 371

 

COUNT NINE - CONSPIRACY
(18 U.S.C. 371)

The Grand Jury further charges:

THE RELEVANT PARTIES AND ENTITIES

87. STEVEN E. GOLDBERG is hereby indicted and made a defendant on the charges stated below:

88. Paragraphs 7 and 12 through 21 of Count One and Paragraphs 35 and 36 of Count Three of the Indictment are repeated, re-alleged and incorporated in Count Nine as if fully set forth below.

89. Various persons and entities, not made defendants herein, participated as co-conspirators in the offense charged herein and performed acts and made statements in furtherance thereof, including Provider A and Broker A.

DESCRIPTION OF THE OFFENSE

90. From as early as December 2001 until at least November 2006, the exact dates being unknown to the Grand Jury, in the Southern District of New York and elsewhere, STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and Broker A, and others known and unknown, unlawfully, willfully, and knowingly did combine, conspire, confederate, and agree together and with each other to commit offenses against the United States, to wit, to violate Title 18, United States Code, Section 1343, and to defraud the United States and an agency thereof, to wit, the Internal Revenue Service ("IRS") of the United States Department of the Treasury, all in violation of Title 18, United States Code, Section 371.

91. It was a part and an object of the conspiracy that STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and Broker A, and others known and unknown, unlawfully, willfully, and knowingly would and did devise and intend to devise a scheme and artifice to defraud municipal issuers and to obtain money and property from municipal issuers by means of false and fraudulent pretenses, representations, and promises, namely a scheme to deprive municipal issuers of money by causing them to award investment agreements and other municipal finance contracts at artificially determined or suppressed rates, and to deprive the municipal issuers of the property right to control their assets by causing them to make economic decisions based on false and misleading information, and for purposes of executing such scheme and artifice, and attempting to do so, would and did transmit and cause to be transmitted by means of wire, radio or television communication in interstate or foreign commerce any writings, signs, signals, pictures or sounds, in violation of Title 18, United States Code, Section 1343.

92. It was further a part and an object of the conspiracy that STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and Broker A, and others known and unknown, would and did defraud the United States of America and the IRS by impeding, impairing, obstructing, and defeating the lawful government functions of the IRS in the ascertainment, computation, assessment, and collection of revenue due and owing from municipal issuers and in exercising its responsibilities to monitor compliance with Treasury regulations related to tax-exempt municipal bonds, in violation of Title 18, United States Code, Section 371.

THE MANNER AND MEANS BY WHICH THE
CONSPIRACY WAS CARRIED OUT

The manner and means by which the conspiracy was sought to be accomplished included, among others, the following:

93. Through the control and manipulation of bidding for investment agreements and other municipal finance contracts, STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and Broker A, and others known and unknown, attempted to increase the number and profitability of investment agreements and other municipal finance contracts awarded to Provider A by municipal issuers that used Broker A as their broker.

94. For purposes of effectuating the aforesaid conspiracy, STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and Broker A, and others known and unknown, did those things which they conspired to do, including among other things:

    (a) discussing and agreeing with Broker A which of Provider A's competitors should and should not be solicited to submit bids for a particular investment agreement or other municipal finance contract;

    (b) obtaining from Broker A information about the prices, price levels, rates, conditions or other information related to competing providers' bids, including, in some instances, the exact price, price level or rate of competing providers' bids;

    (c) determining Provider A's bids after obtaining information from Broker A about the prices, price levels, rates, conditions, or other information related to competing providers' bids;

    (d) submitting and arranging to be submitted, intentionally losing bids for certain investment agreements or other municipal finance contractsbrokered by Broker A to make it appear that Provider A had competed for those agreements or contracts, when, in fact, it had not;

    (e) agreeing to pay and arranging for kickback payments to be made to Broker A, in the form of fees that were inflated, relative to the services performed, or unearned. These payments were made in exchange for Broker A's assistance in controlling and manipulating the competitive bidding process and were not disclosed to the municipal issuers that hired Broker A or to the IRS;

    (f) misrepresenting to municipal issuers or bond counsel that the bidding process was bona fide and in compliance with Treasury regulations or was otherwise competitive;

    (g) certifying, causing to be certified, and forwarding certifications to municipal issuers or bond counsel stating that the bidding process for certain investment agreements or other municipal finance contracts was bona fide and in compliance with Treasury regulations or was otherwise competitive, when, in fact, it was not; and

    (h) causing municipal issuers to award investment agreements and other municipal finance contracts to Provider A, which agreements and contracts the municipal issuers would not have awarded to Provider A if they had true and accurate information regarding the bidding process;

    (i) enabling Provider A to perform investment agreements or other municipal finance contracts at artificially determined or suppressed rates that deprived and will continue to deprive municipal issuers of money and property; and

    (j) causing municipal issuers not to file required reports with the IRS or to file inaccurate reports with the IRS, and on occasion, to fail to give the IRS or the United States Treasury money to which it was entitled, thus jeopardizing the tax-exempt status of the underlying bonds.

    OVERT ACTS

95. In furtherance of the conspiracy and to effect the illegal objects thereof, STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and Broker A, and others known and unknown, committed or caused to be committed the following overt acts, among others, in the Southern District of New York and elsewhere:

    (a) on numerous occasions, at or about the time bids were due, the defendant and co-conspirators participated in telephone calls with Broker A during which the defendant obtained information about the prices, price levels, rates, conditions or other information related to competing providers' bids. The defendant used this information to determine Provider A's bids. On some occasions, defendant obtained the exact prices, price levels, rates, conditions or other information related to competing providers' bids from Broker A and used that information to lower Provider A's bids and still win the contract. As a result of this control and manipulation of the bidding process, Provider A was awarded, has performed, and is scheduled to continue to perform investment agreements and other municipal finance contracts at artificially determined or suppressed levels that deprived and will continue to deprive municipal issuers of money and property;

    (b) on numerous occasions, at or about the time bids were due, the defendant and co-conspirators participated in telephone calls and other wire transmissions with Broker A during which the defendant agreed to, and did, submit intentionally losing bids for investment agreements and other municipal finance contracts. Broker A sometimes provided the defendant with the prices, price levels, rates, conditions or other information related to competing providers' bids to assist them in preparing such intentionally losing bids;

    (c) on occasion, the defendant and co-conspirators participated in telephone calls during which they discussed, made or sought to make arrangements for Provider A to pay Broker A kickbacks;

    (d) on numerous occasions, the defendant and co-conspirators misrepresented to municipal issuers or their bond counsel the circumstances under which investment agreements and other municipal finance contracts were bid;

    (e) on numerous occasions, the defendant and co-conspirators certified, caused to be certified, and forwarded certifications to municipal issuers or their bond counsel stating that the bidding process for certain investment agreements or other municipal finance contracts was bona fide and in compliance with Treasury regulations or was otherwise competitive, when, in fact, it was not;

    (f) on numerous occasions, Provider A performed investment agreements or other municipal finance contracts and made payments to municipal issuers via wire transfer at artificially determined or suppressed rates. Provider A continues to perform some of these agreements or contracts; and

    (g) with respect to the award and performance of an investment agreement for a state educational facilities authority, defendant GOLDBERG and co-conspirators, including Provider A and Broker A, committed the following overt acts, among others:

      (i) on or about January 20, 2004, during a telephone call on the day bids were due, Broker A suggested to defendant GOLDBERG that he could lower the rate GOLDBERG was preparing to submit on behalf of Provider A and still win the agreement;

      (ii) on or about January 20, 2004, defendant GOLDBERG submitted a bid to the state educational facilities authority at a suppressed rate in accordance with Broker A's suggestion and Provider A was awarded the agreement; and (iii) on or about April 14, 2006, Provider A made, via interstate wire transfer, a payment of principal and interest of approximately $2,761,041.96 to a state educational facilities authority, which payment was artificially determined and suppressed.

IN VIOLATION OF TITLE 18, UNITED STATES CODE, SECTION 371

 

COUNT TEN - CONSPIRACY
(18 U.S.C. 371)

The Grand Jury further charges:

THE RELEVANT PARTIES AND ENTITIES

96. STEVEN E. GOLDBERG is hereby indicted and made a defendant on the charges stated below:

97. Paragraphs 8 and 12 through 21 of Count One and Paragraphs 35 and 36 of Count Three of the Indictment are repeated, re-alleged, and incorporated in Count Ten as if fully set forth below.

98. Various persons and entities, not made defendants herein, participated as co-conspirators in the offense charged herein and performed acts and made statements in furtherance thereof, including Provider A and Broker B.

DESCRIPTION OF THE OFFENSE

99. From as early as September 2001 until at least November 2006, the exact dates being unknown to the Grand Jury, in the Southern District of New York and elsewhere, STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and Broker B, and others known and unknown, unlawfully, willfully, and knowingly did combine, conspire, confederate, and agree together and with each other to commit offenses against the United States, to wit, to violate Title 18, United States Code, Section 1343, and to defraud the United States and an agency thereof, to wit, the Internal Revenue Service ("IRS") of the United States Department of the Treasury, all in violation of Title 18, United States Code, Section 371.

100. It was a part and an object of the conspiracy that STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and Broker B, and others known and unknown, unlawfully, willfully, and knowingly would and did devise and intend to devise a scheme and artifice to defraud municipal issuers and to obtain money and property from municipal issuers by means of false and fraudulent pretenses, representations, and promises, namely a scheme to deprive municipal issuers of money by causing them to award investment agreements and other municipal finance contracts at artificially determined or suppressed rates, and to deprive the municipal issuers of the property right to control their assets by causing them to make economic decisions based on false and misleading information, and for purposes of executing such scheme and artifice, and attempting to do so, would and did transmit and cause to be transmitted by means of wire, radio or television communication in interstate or foreign commerce any writings, signs, signals, pictures or sounds, in violation of Title 18, United States Code, Section 1343.

101. It was further a part and an object of the conspiracy that STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and Broker B, and others known and unknown, would and did defraud the United States of America and the IRS by impeding, impairing, obstructing, and defeating the lawful government functions of the IRS in the ascertainment, computation, assessment, and collection of revenue due and owing from municipal issuers and in exercising its responsibilities to monitor compliance with Treasury regulations related to tax-exempt municipal bonds, in violation of Title 18, United States Code, Section 371.

THE MANNER AND MEANS BY WHICH THE
CONSPIRACY WAS CARRIED OUT

The manner and means by which the conspiracy was sought to be accomplished included, among others, the following:

102. Through the control and manipulation of bidding for investment agreements and other municipal finance contracts, STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and Broker B, and others known and unknown, attempted to increase the number and profitability of investment agreements and other municipal finance contracts awarded to Provider A by municipal issuers that used Broker B as their broker.

103. For purposes of effectuating the aforesaid conspiracy, STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and Broker B, and others known and unknown, did those things which they conspired to do, including among other things:

    (a) discussing and agreeing with Broker B which of Provider A's competitors should and should not be solicited to submit bids for a particular investment agreement or other municipal finance contract;

    (b) obtaining from Broker B information about the prices, price levels, rates, conditions or other information related to competing providers' bids, including, in some instances, the exact price, price level or rate of competing providers' bids;

    (c) determining Provider A's bids after obtaining information from Broker B about the prices, price levels, rates, conditions, or other information related to competing providers' bids;

    (d) submitting and arranging to be submitted, intentionally losing bids for certain investment agreements or other municipal finance contractsbrokered by Broker Bto make it appear that Provider A had competed for those agreements or contracts, when, in fact, it had not;

    (e) agreeing to pay and payingCompany B kickbacks in exchange for the control and manipulation of the competitive bidding process by Broker B, acting through its agent Company B. Provider A paid the kickbacks by hiring Company B in connection with transactions known as swaps between one or more financial institutions and paying "swap fees" to Company B. Some of the swap fees were inflated relative to the services performed, or unearned, and none of the swap fees were disclosed to municipal issuers that hired Broker B or to the IRS;

    (f) misrepresenting to municipal issuers or bond counsel that the bidding process was bona fide and in compliance with Treasury regulations or was otherwise competitive;

    (g) certifying, causing to be certified, and forwarding certifications to municipal issuers or bond counsel stating that the bidding process for certain investment agreements or other municipal finance contracts was bona fide and in compliance with Treasury regulations or was otherwise competitive, when, in fact, it was not;

    (h) causing municipal issuers to award investment agreements and other municipal finance contracts to Provider A, which agreements and contracts the municipal issuers would not have awarded to Provider A if they had true and accurate information regarding the bidding process;

    (i) enabling Provider A to perform investment agreements or other municipal finance contracts at artificially determined or suppressed rates that deprived and will continue to deprive municipal issuers of money and property; and

    (j) causing municipal issuers not to file required reports with the IRS or to file inaccurate reports with the IRS and, on occasion, to fail to give the IRS or the United States Treasury money to which it was entitled, thus jeopardizing the tax-exempt status of the underlying bonds.

OVERT ACTS

104. In furtherance of the conspiracy and to effect the illegal objects thereof, STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and Broker B, and others known and unknown, committed or caused to be committed the following overt acts, among others, in the Southern District of New York and elsewhere:

    (a) on occasion, at or about the time bids were due, the defendant and co-conspirators participated in telephone calls with Broker B during which he obtained information about the prices, price levels, rates, conditions or other information related to competing providers' bids. The defendant used this information to determine Provider A's bids. On occasion, the defendant obtained the exact prices, price levels, rates, conditions or other information related to competing providers' bids from Broker B and used that information to lower Provider A's bid and still win the contract. As a result of this control and manipulation of the bidding process, Provider A was awarded, has performed, and is scheduled to continue to perform investment agreements and other municipal finance contracts at artificially determined or suppressed levels that deprived and will continue to deprive municipal issuers of money or property;

    (b) on at least one occasion, at or about the time bids were due, the defendant participated in a telephone call with Broker B, during which defendant agreed to, and did, submit an intentionally losing bid for an investment agreement. The defendant was provided the prices, price levels, rates, conditions or other information related to competing providers' bids by Broker B to assist him in preparing such an intentionally losing bid;

    (c) on occasion, the defendant and co-conspirators participated in telephone calls during which they discussed, made or sought to make arrangements for Company B to receive kickbacks;

    (d) on occasion, the defendant and co-conspirators misrepresented to municipal issuers or their bond counsel the circumstances under which investment agreements and other municipal finance contracts were bid;

    (e) on occasion, the defendant and co-conspirators certified, caused to be certified, and forwarded certifications to municipal issuers or their bond counsel stating that the bidding process for certain investment agreements or other municipal finance contracts was bona fide and in compliance with Treasury regulations or was otherwise competitive, when, in fact, it was not;

    (f) on occasion, Provider A performed investment agreements or other municipal finance contracts and made payments to municipal issuers via wire transfer at artificially determined or suppressed rates. Provider A continues to perform some of these agreements and contracts; and

    (g) with respect to the award and performance of an investment agreement for a state water pollution abatement trust, defendant GOLDBERG and co-conspirators committed the following overt acts, among others:

      (i) on or about November 2, 2004, during a telephone call before bids were due, Broker B told defendant GOLDBERG that he should reduce the rate he was otherwise prepared to submit on behalf of Provider A on one of three funds being bid. GOLDBERG agreed to submit a bid at the rate suggested by Broker B and Provider A was awarded the investment agreement; and

      (ii) beginning approximately in January 2005, via interstate wire transfer, Provider A made scheduled interest payments to a state water pollution abatement trust at an artificially determined and suppressed rate, including a payment of approximately $1,768,201.34 on or about July 31, 2006.

IN VIOLATION OF TITLE 18, UNITED STATES CODE, SECTION 371

 

COUNT ELEVEN - CONSPIRACY
(18 U.S.C. 371)

The Grand Jury further charges

THE RELEVANT PARTIES AND ENTITIES

105. STEVEN E. GOLDBERG is hereby indicted and made a defendant on the charges stated below:

106. Paragraphs 9 and 12 through 21 of Count One and Paragraphs 35 and 36 of Count Three of the Indictment are repeated, re-alleged, and incorporated in Count Eleven as if fully set forth below.

107. Various persons and entities, not made defendants herein, participated as co-conspirators in the offense charged herein and performed acts and made statements in furtherance thereof, including Provider A and Broker C.

DESCRIPTION OF THE OFFENSE

108. From as early as November 2001 until at least November 2006, the exact dates being unknown to the Grand Jury, in the Southern District of New York and elsewhere, STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and Broker C, and others known and unknown, unlawfully, willfully, and knowingly did combine, conspire, confederate, and agree together and with each other to commit offenses against the United States, to wit, to violate Title 18, United States Code, Section 1343, and to defraud the United States and an agency thereof, to wit, the Internal Revenue Service ("IRS") of the United States Department of the Treasury, all in violation of Title 18, United States Code, Section 371.

109. It was a part and an object of the conspiracy that STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and Broker C, and others known and unknown, unlawfully, willfully, and knowingly would and did devise and intend to devise a scheme and artifice to defraud municipal issuers and to obtain money and property from municipal issuers by means of false and fraudulent pretenses, representations, and promises, namely a scheme to deprive municipal issuers of money by causing them to award investment agreements and other municipal finance contracts at artificially determined or suppressed rates, and to deprive the municipal issuers of the property right to control their assets by causing them to make economic decisions based on false and misleading information, and for purposes of executing such scheme and artifice, and attempting to do so, would and did transmit and cause to be transmitted by means of wire, radio or television communication in interstate or foreign commerce any writings, signs, signals, pictures or sounds, in violation of Title 18, United States Code, Section 1343.

110. It was further a part and an object of the conspiracy that STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and Broker C, and others known and unknown, would and did defraud the United States of America and the IRS by impeding, impairing, obstructing, and defeating the lawful government functions of the IRS in the ascertainment, computation, assessment, and collection of revenue due and owing from municipal issuers and in exercising its responsibilities to monitor compliance with Treasury regulations related to tax-exempt municipal bonds, in violation of Title 18, United States Code, Section 371.

THE MANNER AND MEANS BY WHICH THE
CONSPIRACY WAS CARRIED OUT

The manner and means by which the conspiracy was sought to be accomplished included, among others, the following:

111. Through the control and manipulation of bidding for investment agreements and other municipal finance contracts, STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and Broker C, and others known and unknown, attempted to increase the number and profitability of investment agreements and other municipal finance contracts awarded to Provider A by municipal issuers that used Broker C as their broker.

112. For purposes of effectuating the aforesaid conspiracy, STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and Broker C, and others known and unknown, did those things which they conspired to do, including among other things:

    (a) obtaining from Broker C information about the prices, price levels, rates, conditions or other information related to competing providers' bids, including, in some instances, the exact price, price level or rate of competing providers' bids;

    (b) determining Provider A's bids after obtaining information from Broker C about the prices, price levels, rates, conditions, or other information related to competing providers' bids;

    (c) submitting and arranging to be submitted, intentionally losing bids for certain investment agreements or other municipal finance contractsbrokered by Broker Cto make it appear that Provider A had competed for those agreements or contracts, when, in fact, it had not;

    (d) misrepresenting to municipal issuers or bond counsel that the bidding process was bona fide and in compliance with Treasury regulations or was otherwise competitive;

    (e) certifying, causing to be certified, and forwarding certifications to municipal issuers or bond counsel stating that the bidding process for certain investment agreements or other municipal finance contracts was bona fide and in compliance with Treasury regulations or was otherwise competitive, when, in fact, it was not;

    (f) causing municipal issuers to award investment agreements and other municipal finance contracts to Provider A, which agreements and contracts the municipal issuers would not have awarded to Provider A if they had true and accurate information regarding the bidding process;

    (g) enabling Provider A to perform investment agreements or other municipal finance contracts at artificially determined or suppressed rates that deprived and will continue to deprive municipal issuers of money and property; and

    (h) causing municipal issuers not to file required reports with the IRS or to file inaccurate reports with the IRS and, on occasion, to fail to give the IRS or the United States Treasury money to which it was entitled, thus jeopardizing the tax-exempt status of the underlying bonds.

OVERT ACTS

113. In furtherance of the conspiracy and to effect the illegal objects thereof, STEVEN E. GOLDBERG, the defendant, and co-conspirators, including Provider A and Broker C, and others known and unknown, committed or caused to be committed the following overt acts, among others, in the Southern District of New York and elsewhere:

    (a) on numerous occasions, at or about the time bids were due, the defendant and co-conspirators participated in telephone calls with Broker C during which he obtained information about the prices, price levels, rates, conditions or other information related to competing providers' bids. The Defendant used this information to determine Provider A's bids. On some occasions, the defendant obtained the exact prices, price levels, rates, conditions or other information related to competing providers' bids from Broker C and used that information to lower Provider A's bid and still win the contract. As a result of this control and manipulation of the bidding process, Provider A was awarded, has performed, and is scheduled to continue to perform investment agreements and other municipal finance contracts at artificially determined or suppressed levels that deprived and will continue to deprive municipal issuers of money or property;

    (b) on numerous occasions, at or about the time bids were due, the defendant and co-conspirators participated in telephone calls and other wire transmissions with Broker C, during which the defendant agreed to, and did, submit intentionally losing bids for investment agreements and other municipal finance contracts. The defendant sometimes was provided the prices, price levels, rates, conditions or other information related to competing providers' bids to assist him in preparing such intentionally losing bids;

    (c) on numerous occasions, the defendant and co-conspirators misrepresented to municipal issuers or their bond counsel the circumstances under which investment agreements and other municipal finance contracts were bid;

    (d) on numerous occasions, the defendant and co-conspirators certified, caused to be certified, and forwarded certifications to municipal issuers or their bond counsel stating that the bidding process for certain investment agreements or other municipal finance contracts was bona fide and in compliance with Treasury regulations or was otherwise competitive, when, in fact, it was not;

    (e) on numerous occasions, Provider A performed investment agreements or other municipal finance contracts and made payments to municipal issuers via interstate wire transfer at artificially determined or suppressed rates. Provider A continues to perform some of these agreements and contracts;

    (f) with respect to the award and performance of an investment agreement for a state housing finance agency, defendant GOLDBERG and co-conspirators committed the following overt acts, among others:

      (i) on or about November 20, 2001, during a telephone call with defendant GOLDBERG and Broker C, Broker C told GOLDBERG that Provider B intended to bid on the agreement. GOLDBERG responded that Peter Grimm "owes him one" in connection with a prior bid, and that he would call Grimm to discuss the matter;

      (ii) on or about November 20, 2001, later that same day, defendant GOLDBERG called Peter Grimm. Grimm stated that he had heard from Broker C that GOLDBERG wanted to "call in" a favor that Grimm owed GOLDBERG with regard to the investment agreement. Grimm offered to "back off" the rate he was prepared to submit on behalf of Provider B. GOLDBERG told Grimm he would "let him know" on the day bids were due;

      (iii) on or about November 26, 2001, during a telephone call between defendant GOLDBERG and Peter Grimm on the day bids were due, Grimm again offered to "back off" the rate Grimm was prepared to submit on behalf of Provider B to which GOLDBERG agreed. Grimm stated that he would "take it easy today" on his bid; and

      (iv) on or about November 26, 2001, during a telephone call between defendant GOLDBERG and Peter Grimm at the time bids were due, GOLDBERG obtained from Grimm Provider B's exact bid rate and other information concerning Provider B's bid and GOLDBERG used this information to determine Provider A's bid. As a result, Provider A was awarded this investment agreement at an artificially determined and suppressed rate; and

    (g) with respect to the award and performance of an investment agreement for a state finance authority, defendant GOLDBERG and co-conspirators, including Provider A and Broker C, committed the following overt acts, among others:

      (i) on or about April 7, 2005, during a telephone call between defendant GOLDBERG and Broker C, on the day bids were due, GOLDBERG told Broker C the rate he planned to bid and asked if his bid was "too high." Broker C replied that if GOLDBERG's bid was too high, he would "shave it a little."

      (ii) on or about April 7, 2005, during a telephone call between Broker C and defendant GOLDBERG, Broker C told GOLDBERG to submit a bid that was lower than the rate that GOLDBERG had previously stated he was prepared to submit. GOLDBERG submitted his bid at the lower rate and was awarded the investment agreement; and

      (iii) beginning in approximately June 30, 2005, Provider A made interest payments via interstate wire transfer to the state financing authority at an artificially determined and suppressed rate, including a payment of approximately $38,770.39 on or about June 30, 2006.

IN VIOLATION OF TITLE 18, UNITED STATES CODE, SECTION 371

 

COUNT TWELVE - CONSPIRACY
(18 U.S.C. 371)

The Grand Jury further charges:

THE RELEVANT PARTIES AND ENTITIES

114. DOMINICK P. CAROLLO is hereby indicted and made a defendant on the charges stated below:

115. Paragraphs 12 through 21 of Count One and Paragraph 78 of Count Eight of the Indictment are repeated, realleged, and incorporated in Count Twelve as if fully set forth below.

116. From as early as July 2003 until at least November 2006, DOMINICK P. CAROLLO was a Managing Director at Financial Institution B, a financial institution headquartered in Canada. CAROLLO worked at Financial Institution B's offices in New York, New York and was responsible for Financial Institution B's business involving the sale of investment agreements and other municipal finance contracts, and of financial transactions known as swaps to other providers of investment agreements and other municipal finance contracts.

117. Various persons and entities, not made defendants herein, participated as co-conspirators in the offense charged herein and performed acts and made statements in furtherance thereof, including Financial Institution B and CDR.

DESCRIPTION OF THE OFFENSE.

118. From as early as July 2003 until at least November 2006, the exact dates being unknown to the Grand Jury, in the Southern District of New York and elsewhere, DOMINICK P. CAROLLO, the defendant, and co-conspirators, including Financial Institution B and CDR, and others known and unknown, unlawfully, willfully, and knowingly did combine, conspire, confederate and agree together and with each other to commit offenses against the United States, to wit, to violate Title 18, United States Code, Sections 1343 and 1005, and to defraud the United States and an agency thereof, to wit, the Internal Revenue Service ("IRS") of the United States Department of the Treasury, all in violation of Title 18, United States Code, Section 371.

119. It was a part and an object of the conspiracy that defendant DOMINICK P. CAROLLO, the defendant, and co-conspirators, including Financial Institution B and CDR, and others known and unknown, unlawfully, willfully, and knowingly would and did devise and intend to devise a scheme and artifice to defraud municipal issuers and to obtain money and property from municipal issuers by means of false and fraudulent pretenses, representations, and promises, namely a scheme to deprive municipal issuers of money by causing them to award investment agreements and other municipal finance contracts at artificially determined or suppressed rates, and to deprive the municipal issuers of the property right to control their assets by causing them to make economic decisions based on false and misleading information, and for purposes of executing such scheme and artifice, and attempting to do so, would and did transmit and cause to be transmitted by means of wire, radio or television communication in interstate or foreign commerce any writings, signs, signals, pictures or sounds, in violation of Title 18, United States Code, Section 1343.

120. It was further a part and an object of the conspiracy that DOMINICK P. CAROLLO, the defendant, and co-conspirators, including Financial Institution B and CDR, and others known and unknown, would and did defraud the United States of America and the IRS by impeding, impairing, obstructing and defeating the lawful government functions of the IRS in the ascertainment, computation, assessment, and collection of revenue due and owing from municipal issuers and in exercising its responsibilities to monitor compliance with Treasury regulations related to tax-exempt municipal bonds, in violation of Title 18, United States Code, Section 371.

121. It was further a part and an object of the conspiracy that DOMINICK P. CAROLLO, the defendant, and co-conspirators, including Financial Institution B and CDR, and others known and unknown, with intent to defraud the United States and any agency thereof, to wit, the United States Department of the Treasury and the IRS, pursuant to the scheme identified in this Count, participated, shared in and received (directly or indirectly) money, profit, property, benefits, to wit, one or more kickbacks identified in this Count, through transactions, commissions, contracts and any other acts of a financial institution, to wit, Financial Institution B, in violation of Title 18, United States Code, Section 1005.

THE MANNER AND MEANS BY WHICH THE
CONSPIRACY WAS CARRIED OUT

The manner and means by which the conspiracy was sought to be accomplished included, among others, the following:

122. Through the control and manipulation of bidding for investment agreements and other municipal finance contracts, DOMINICK P. CAROLLO, the defendant, and co-conspirators, including Financial Institution B and CDR, and others known and unknown, attempted to increase the number and profitability of investment agreements, and other municipal finance contracts awarded to Financial Institution B by municipal issuers that used CDR as their broker. Defendant CAROLLO and co-conspirators also attempted to increase the number and profitability of swaps Financial Institution B entered into with other providers.

123. For purposes of effectuating the aforesaid conspiracy DOMINICK P. CAROLLO, the defendant, and co-conspirators, including Financial Institution B and CDR, and others known and unknown, did those things which they conspired to do, including among other things:

    (a) obtaining from CDR information about the prices, price levels, rates, conditions or other information related to competing providers' bids, including, in some instances, the exact price, price level or rate of competing providers' bids;

    (b) determining Financial Institution B's bids after obtaining information from CDR about the prices, price levels, rates, conditions, or other information related to competing providers' bids;

    (c) agreeing to pay and arranging for Financial Institution B to pay kickbacks to CDR on behalf of Provider A, in the form of fees that were inflated, relative to the services performed, or unearned. These payments were made in exchange for CDR's assistance in controlling and manipulating the competitive bidding process and were not disclosed to the municipal issuers that hired CDR or to the IRS;

    (d) misrepresenting to municipal issuers or bond counsel that the bidding process was bona fide and in compliance with Treasury regulations or was otherwise competitive;

    (e) certifying, causing to be certified, and forwarding certifications to municipal issuers or bond counsel stating that the bidding process for certain investment agreements or other municipal finance contracts was bona fide and in compliance with Treasury regulations or was otherwise competitive, when, in fact, it was not;

    (f) causing municipal issuers to award investment agreements and other municipal finance contracts to Financial Institution B, which agreements and contracts the municipal issuers would not have awarded to Financial Institution B if they had true and accurate information regarding the bidding process;

    (g) enabling Financial Institution B to perform investment agreements or other municipal finance contracts at artificially determined or suppressed rates; and

    (h) causing municipal issuers not to file required reports with the IRS or to file inaccurate reports with the IRS and, on occasion, to fail to give the IRS or the United States Treasury money to which it was entitled, thus jeopardizing the tax-exempt status of the underlying bonds.

OVERT ACTS

124. In furtherance of the conspiracy and to effect the illegal objects thereof, DOMINICK P. CAROLLO, the defendant, and co-conspirators, including Financial Institution B and CDR, and others known and unknown, committed or caused to be committed the following overt acts, among others, in the Southern District of New York and elsewhere:

    (a) on occasion, at or about the time bids were due, the defendant and co-conspirators participated in telephone calls with CDR during which he obtained information about the prices, price levels, rates, conditions or other information related to competing providers' bids. The defendant used this information to determine Financial Institution B's bids. As a result of this control and manipulation of the bidding process, Financial Institution B was awarded, has performed, and is scheduled to continue to perform investment agreements or other municipal finance contracts at artificially determined or suppressed levels that deprived and will continue to deprive municipal issuers of money and property;

    (b) on occasion, the defendant and co-conspirators participated in telephone calls during which they discussed, made or sought to make arrangements for Provider A to pay CDR kickbacks;

    (c) on occasion, Financial Institution B performed investment agreements or other municipal finance contracts and made payments to municipal issuers via wire transfer at artificially determined or suppressed rates. Financial Institution B continues to perform some of these agreements and contracts; and

    (d) with respect to the award and performance of three investment agreements for a state water development authority, defendant CAROLLO and co-conspirators, including Financial Institution B and CDR, committed the following overt acts:

      (i) on or about October 23, 2003, defendant CAROLLO made arrangements for Financial Institution B to pay a kickback to CDR on behalf of Provider A, in the form of a fee in connection with a swap between Provider A and Financial Institution B relating to one of the investment agreements for the state authority;

      (ii) on or about November 3, 2003, via interstate wire transfer, Financial Institution B paid a $4,500 kickback to CDR on behalf of Provider A relating to one of the state authority's investment agreements; and

      (iii) on or about August 12, 2005, via interstate wire transfer, Financial Institution B paid a second $4,500 a kickback to CDR on behalf of Provider A relating to one of the investment agreements with the state authority.

IN VIOLATION OF TITLE 18, UNITED STATES CODE, SECTION 371

Dated: 7/27/10


________/s/_________________
CHRISTINE A. VARNEY
Assistant Attorney General

________/s/_________________
SCOTT D. HAMMOND
Deputy Assistant Attorney General

________/s/_________________
MARC SIEGEL
Director of Criminal Enforcement

________/s/_________________
PREET BHARARA
United States Attorney
Southern District of New York

A True Bill

________/s/_________________
Foreperson

________/s/_________________
RALPH T. GIORDANO
Chief, New York Office

________/s/_________________
REBECCA MEIKLEJOHN
ANTONIA R. HILL
STEVEN TUGANDER
KEVIN B. HART
LAURA HEISER

Attorneys
U.S. Department of Justice, Antitrust Division
26 Federal Plaza, Room 3630
United States Department of Justice
New York, New York 10278
(212) 264-0390