James Johnson, Bid-Rigging Scheme, New York 2022

A former financial institution employee pleaded guilty today for his participation in a conspiracy related to municipal bonds, the federal government announced.

Alexander Wright, a resident of New York City, engaged in a fraud conspiracy in the municipal finance industry, according to a plea proceeding held today in the U.S. District Court in Manhattan.

The New York-based financial institution that employed Wright as a vice president of the municipal derivatives marketing group was a provider of investment agreements as well as other municipal finance contracts to public entities.

Public entities seek to invest money from a variety of sources, primarily the proceeds of municipal bonds that they issue, to raise money for, among other things, public projects.

The government said in court documents that from approximately June 12, 2002, until approximately June 20, 2002, Wright participated in a fraud conspiracy with former executives from another financial institution, among others.

One of the co-conspirators acted as the broker for a municipal finance contract, which was to be competitively bid. He gave Wright information about the prices or price levels of competitors’ bids, a practice known as a “last look.” He signaled Wright to change his bid to a specific number so that Wright’s employer could make more money.

The government said that, as a result of the bid manipulation, Wright’s employer won the contract at an artificially inflated price, which, since the issuer paid a higher price for the contract, deprived the municipal issuer of money and property.

“By engaging in non-competitive practices, such as sharing confidential bidding information, the co-conspirators undermined the integrity of the municipal bond market and deprived the bond issuer of a fair and competitive price,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s Criminal Enforcement Program.

The conspiracy to commit wire fraud for which Wright is charged carries a maximum penalty of five years in prison and a $250,000 criminal fine. The maximum fine for this offense may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The charges announced today resulted from an ongoing investigation conducted by the Antitrust Division’s New York and Chicago Field Offices, the FBI and IRS-CI.

The division is coordinating its investigation with the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve.