Former JPMorgan Banker Admits Role in Muni Bid-rigging Scheme

Thursday, 19 Jul 2012 07:29 AM

 

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A former JPMorgan Chase & Co. banker pleaded guilty to fraudulently rigging a municipal finance contract 10 years ago.

Alexander Wright, 45, pleaded guilty in Manhattan federal court to one count of conspiracy to commit wire fraud for manipulating the bidding process for a June 2002 contract. The contract was tied to a $31 million bond offering for a New Jersey state healthcare facility.

The plea is the latest in a broad government investigation of the $3.7 trillion U.S. municipal bond market that has focused on rooting out schemes to fix prices and rig bids on bond transactions.

"Mr. Wright, I take it that at the time you entered into this bid-rigging scheme ... you understood that what you were doing was against the law?" Magistrate Judge Frank Maas asked the defendant.

"Yes, your honor," Wright responded.

He was released on $100,000 bail.

Rebecca Meiklejohn, of the U.S. Department of Justice antitrust division, said at the plea hearing that Wright was expected to testify at the trial starting at the end of July of former UBS AG executives Gary Heinz, Michael Welty and Peter Ghavami, who were also charged in a bid-rigging scheme. They have pleaded not guilty to the charges.

By agreeing to testify, Wright may receive a more lenient sentence than the maximum of five years imprisonment for the charge of conspiracy to which he pleaded guilty. Wright is liable for restitution of $29,600, according to court documents.

JPMorgan received court permission in June to pay as much as $44.6 million to resolve private litigation accusing it of conspiring to fix prices and rig bids on municipal bond transactions.

The settlement followed the bank's agreement last July to pay $211.2 million to settle charges by federal and state authorities that it cheated government entities in 31 U.S. states on 93 transactions.

The case is USA v. Alexander Wright, U.S. District Court, Southern District of New York, No. 12-cr-551.

© 2014 Thomson/Reuters. All rights reserved.

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