A US federal court has slapped former UBS banker Peter Ghavami with an 18 month prison sentence and a one million dollar fine for deceiving US municipalities by rigging muni-bond bids.
US District Judge Kimba Wood hit the former UBS head of commodities with imprisonment and a criminal penalty after prosecutors found he had been part of cartel that steered financial contracts to their friends in exchange for kickbacks and other favours.
Prosecutors added that the group of bankers, including former UBS vice presidents Gary Heinz and Michael Welty who await sentencing, conducted the cartel between 2001 and 2006, while falsely certifying that the processes were competitive.
An attorney with the Department of Justice's antitrust division, Kalina Tulley, called Ghavami the "architect" of the scheme.
"I've always tried to conduct my life with integrity and consideration," said Belgian national, Ghavami to Wood, before apologizing to affected municipalities and his wife and daughter.
"All I want to do is to protect Julie and Athena from harm and to get to the point where we can be a family again."
However, after the hearing a smiling Ghavami declined to comment. But his lawyer, Charles Stillman, said "we're very pleased at the outcome and we feel that justice was done."
Conspiracy to Defraud
Since 2010, the US Department of Justice charged Heinz, Ghavami and Welty, as part of its investigation of the $3.7tn U.S. municipal bond market, and 19 other people have been convicted or pleaded guilty.
In August last year, a federal jury convicted former members of UBS' municipal securities desk Ghavami, Heinz, and Welty of conspiring to defraud municipal bond issuers.
It also convicted Ghavami and Heinz of wire fraud.
Two years ago, UBS agreed to pay $160m in restitution, penalties and disgorgement for the scheme.
While Ghavami received a prison sentence, it is a much shorter sentence than prosecutors had sought, as authorities were seeking over 17 years for the former banker.
However, prosecutors are still hoping for much higher prison sentences for Heinz and Welty.
"These were municipalities that were looking to invest the taxpayers' money," Tulley told Wood.
"These defendants abused that trust."
The case is U.S. v. Ghavami et al, U.S. District Court, Southern District of New York, No. 10-cr-01217.