Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Former Bank of America executive pleads guilty in municipal bond fraud, (Feb 10, 2014)

With a trial set to start, Phillip D. Murphy, a former managing director of Bank of America’s municipal derivatives products desk, pleaded guilty to fraud and conspiracy related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts, the Department of Justice announced today (U.S. v. Murphy, Criminal No. 3:12 CR 235).

According to the indictment issued on July 19, 2012, Murphy participated in a wire fraud scheme and separate fraud conspiracies that began as early as 1998 and continued until 2006. The scheme involved employees of Rubin/Chambers, Dunhill Insurance Services Inc., also known as CDR Financial Products, a broker of municipal finance contracts, and others.

According to the charges, Murphy conspired with CDR and others to increase the number and profitability of investment agreements and other municipal finance contracts awarded to Bank of America. Murphy won investment agreements through CDR’s manipulation of the bidding process in obtaining 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, Murphy submitted intentionally losing bids for certain investment agreements and other contracts when requested, and, on occasion, agreed to pay or arranged for kickbacks to be paid to CDR and other co-conspirator brokers.

Attorneys: Donald Conklin (Hafetz Necheles & Rocco) and Edward Theodore Hinson, Jr. (James, McElroy & Diehl) for Phillip Dennis Murphy.

Companies: Bank of America; Rubin/Chambers; Dunhill Insurance Services Inc.

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