By Dow Jones Business News,
February 10, 2014, 03:15:00 PM EDT
A former Bank of America Corp. executive on Monday pleaded guilty of being part of a fraud conspiracy that allegedly
fixed prices in the municipal bond market, according to the U.S. Department of Justice.
Phillip D. Murphy, the former managing director of Bank of America's municipal derivatives products desk from 1998 to
2002, pleaded guilty of being part of the conspiracy with employees of CDR Financial Products, a broker of municipal
finance contracts, and others. The fraud, part of prosecutors' yearslong investigation into municipal-bond bid rigging,
is tied to bids for contracts for the investment of municipal bond proceeds and other municipal finance contracts.
Mr. Murphy pleaded guilty to two counts of conspiracy and one count of wire fraud, charges that carry a maximum
penalties of between five and 30 years in prison and fines of between $250,000 and $1 million.
Mr. Murphy--who was indicted in July 2012--pleaded guilty to conspiring to make false entries in the reports and
statements originating from his desk, which were sent to bank management.
"By manipulating what was intended to be a competitive bidding process, the conspirators defrauded municipalities,
public entities and taxpayers across the country," Deputy Assistant Attorney General of the Antitrust Division's
Criminal Enforcement Program Brent Snyder said in prepared remarks. "Today's guilty plea reaffirms the Antitrust
Division's continued efforts to hold accountable those who corrupt and subvert the competitive process in our financial
According to charges referenced by the Department of Justice in a press release Monday, Mr. Murphy conspired with CDR
to increase the number and profitability of investment agreements and other municipal finance contracts awarded to Bank
of America. In 2007, Bank of America reached a "leniency" agreement with the Justice Department, in which prosecutors
wouldn't bring criminal charges in exchange for the bank's cooperation in its probe.
Bank of America declined to comment. A lawyer for Mr. Murphy and CDR couldn't immediately be reached for comment.
Mr. Murphy, according to the Justice Department, obtained losing bids from other providers, which is explicitly
prohibited by U.S. Treasury regulations. As a result of the information, various providers won investment agreements and
other municipal finance contracts at artificially determined prices. In exchange for this information, Mr. Murphy
submitted intentionally losing bids for certain investment agreements and other contracts when requested, and
occasionally agreed to pay or arranged for kickbacks to be paid to CDR and other brokers, according to the Justice
Including Mr. Murphy, a total of 17 individuals have been convicted or pleaded guilty in related cases, according to
the Justice Department.
Write to Saabira Chaudhuri at email@example.com
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