Ex-BofA Executive Indicted For Fraud In Bond Probe

Source: Bloomberg

Ex-BofA Executive Indicted For Fraud In Bond Probe
By Tom Schoenberg and Martin Z. Braun - Jul 20, 2012 3:21 PM PT

A former Bank of America Corp. executive was indicted for allegedly participating in what prosecutors said was a “far-reaching conspiracy” to defraud municipal bond investments through bid rigging.

Phillip D. Murphy, former head of Bank of America’s municipal derivatives desk, was charged with conspiracy to defraud the U.S., wire fraud and conspiracy to make false entries in bank records, according to the indictment filed yesterday in federal court in Charlotte, North Carolina.

Murphy “allegedly participated in a complex fraud scheme and conspiracies to manipulate what was supposed to be a competitive process,” Scott D. Hammond, a deputy assistant attorney general in the Justice Department’s Antitrust Division, said in an e-mailed statement. “The division recently convicted at trial several individuals in this investigation, which is ongoing.”

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Bank of America, which self-reported the illegal activity, has been cooperating for more than four years with Justice Department prosecutors who say that bankers paid kickbacks to CDR Financial Products to rig bids on investment contracts sold to local governments. Municipalities bought the contracts with money raised through bond sales, which allowed them to earn a return until the funds were needed for schools, roads, and other public works.

Read more: http://www.bloomberg.com/news/2012-07-20/ex-bofa-executive-indicted-for-fraud-in-municipal-bond-probe-1-.html