Former CEO Martin Kanefsky has pleaded guilty to participating in fraud conspiracies related to the investment of municipal bond proceeds in New York City.
According to court documents, Kanefsky engaged in two separate fraud conspiracies from August 1999 to at least November 2006, and October 2001 to at least November 2006. He gave co-conspirator providers information about competitors’ bids, a practice known as a ‘last look,’ which is prohibited by U.S. Treasury regulations.
Kanefsky also solicited and received intentionally losing bids for certain investment agreements and other municipal finance contracts. As a result, co-conspirator providers won contracts at artificially determined price levels, depriving municipal issuers of money and property.
The court documents also charge that Kanefsky misrepresented to municipal issuers or their bond counsel that the bidding process was in compliance with U.S. Treasury regulations. This caused municipal issuers to award investment agreements and other municipal finance contracts to providers that otherwise would not have been awarded the contracts.
Kanefsky pleaded guilty to participating in two fraud conspiracies and one count of wire fraud. Each of the fraud conspiracies carries a maximum penalty of five years in prison and a $250,000 fine. The wire fraud charge carries a maximum penalty of 20 years in prison and a $250,000 fine.
Kanefsky has agreed to cooperate with the ongoing investigation. The case is part of a larger investigation into the municipal bonds industry, which is being conducted by the Antitrust Division’s New York Field Office, the FBI, and IRS Criminal Investigation.
Related Federal Cases
Key Facts
- State: New York
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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