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TahoeBlue:
I missed this bit : John Paulson's "investment" in Bank Of America:
John Paulson's Major investment in 2009 and now in 2010:

http://www.businessweek.com/news/2010-05-18/paulson-among-funds-adding-to-bank-of-america-stakes-update1-.html
Paulson Among Funds Adding to Bank of America Stakes (Update1)
May 18, 2010, 10:32 AM EDT
By Saijel Kishan and David Mildenberg

May 18 (Bloomberg) -- John Paulson, the hedge-fund manager who amassed a fortune by betting against U.S. mortgage markets, was among more than 50 investment groups that added at least 5 million shares in Bank of America Corp. during the first quarter.

Paulson & Co., based in New York, bought 16.8 million Bank of America shares and held 167.8 million as of March 31, according to a filing yesterday with the U.S. Securities and Exchange Commission. The largest purchase came from Fidelity Investments, which picked up 42.3 million shares of the Charlotte, North Carolina-based bank and held 256.8 million as of March 31.  

Paulson’s reported holdings in financial companies grew 6.5 percent during the quarter. Bank of America remains Paulson’s second-biggest position, with a market value of $2.99 billion, according to the filing. Paulson had told clients in November that shares of the bank may rise to $29.81 by December 2011.

Bank of America gained 18 cents, or 1.1 percent, to $16.53 at 10:27 a.m. in New York Stock Exchange composite trading. The shares have gained 9.8 percent this year, compared with a 24 percent increase in the 24-member KBW Bank Index.

Bank of America raised $19.3 billion in December selling securities at $15 a share in the biggest sale of stock or preferred shares by a U.S. company since at least 2000. The lender later in December repaid $45 billion of U.S. rescue funds.

Paulson left unchanged his Citigroup Inc. stake of 506.7 million shares, according to the filing. The New York-based bank is Paulson’s third-largest reported holding. His biggest reported holding is SPDR Gold Trust, an exchange-traded fund backed by bullion.


http://www.businessinsider.com/john-paulson-bank-of-america-is-a-double-from-here-2009-11#ixzz0oIcLp1Rv
Nov. 18, 2009, 6:53 AM
Paulson & Co told its clients that Bank of America (BAC) stock will double in the next two years.
Paulson's bullish outlook follows the opposite move from SAC Capital, which just sold 90% of its BAC holdings.

Bloomberg: “Banks will have passed the current writedown cycle and have visibility for growth in 2012,” the letter said. Bank of America dropped to $2.53 in February amid concern that the U.S. might seize banks that ran short on capital. While the bank “has risen from when we purchased the stock, we believe considerable upside remains,” the letter said.


http://seekingalpha.com/article/155907-bank-of-america-is-john-paulson-s-second-largest-holding-after-gold
Bank of America Is John Paulson's Second Largest Holding after Gold
Aug 13, 2009

Do you think anyone else got wind of hedge fund manager John Paulson's move into Bank of America (BAC)? Nah - surely the big boys knowing what the other big boys are doing had nothing to do with it.

Paulson is now the 4th largest stakeholder in Bank of America. Considering we have 4 major financial oligarchs who dominate US financial commercial bank assets (plus BAC via their own operations + Countrywide shares an oligopoly in the mortgage market), as long we are sure the US will happily provide cover (which they have made it clear they will), I concur with these banks as long term "sure things". Even too bigger to fail, if you will.

As some have said, you literally have Bernanke and Geithner lobbying for you on a daily basis. The balance sheet is still a black hole, but balance sheets don't seem to matter anymore because of the above-mentioned US taxpayer providing backstop on all future losses. So, much like some of my investments are plays on the government using taxpayers money to support certain industries or companies, Paulson is utilizing the same idea - in a much bigger way.

Bank of America alone is a $2.7 Billion stake. With the stock up about 25% since the end of June, it appears he already made $500M on his $2.2 investment. Boo and Yah.

Billionaire John Paulson’s hedge fund bought 168 million shares of Bank of America Corp. in the second quarter, a regulatory filing showed today, becoming the lender’s fourth-largest shareholder.
It’s the fund’s second- biggest holding after SPDR Gold Trust.

Paulson & Co.’s stake in the Charlotte, North Carolina- based bank was valued at $2.2 billion as of June 30, data compiled by Bloomberg show. The fund ranked behind State Street Corp., Barclays Global Investors and Vanguard Group Inc. among the bank’s biggest shareholders.

Bank of America is the second-largest home lender, trailing Wells Fargo & Co., after acquiring Countrywide Financial Corp. in 2008.

Interestingly Paulson also took a large stake in Regions Financial (RF) which was the one troubled regional bank we had attempted to make a play in for many months. (no recent activity of late) Might have to circle back since Paulson's team is hot, and I found things I liked there as well. (market disagreed with me)

Paulson also bought 35 million shares of Regions Financial Corp., becoming the second-largest shareholder in the Birmingham, Alabama-based bank, according to the filing. Regions declined 8.4 percent during the quarter.

Fifth Third (FITB) also got a lot of attention with 5M new shares bought

Paulson reduced his stake in Market Vectors Gold Miners ETF, a fund that mirrors moves in the Amex Gold Miners Index, after selling 11 million shares. He owned a 5.3 percent stake in the fund in the second quarter valued at $227 million, down from 15 percent in the first three months of the year.

If you are not familiar with Paulson (this is JOHN not HANK), he was one of the few investors to really nail the financial mess, and famously made buckets of money off of it. Based on that track record, his moves are now watched very closely by the investment public.

Paulson’s Credit Opportunities Fund soared almost sixfold in 2007 on bets that subprime mortgages would plummet. Last year, his flagship fund returned 37 percent, compared with a loss of 19 percent for hedge funds on average.

Gold and US government backstopped US financials - an interesting combination. He did reduce his stake in the gold MINERS etf (GDX)


http://www.fundmymutualfund.com/2009/07/wsj-latest-picks-and-pans-from-george.html

TahoeBlue:
This is big: The antitrust investigation  alleged collusion in the $2.8 trillion municipal securities market that the government says delivered profits to Wall Street at taxpayers' expense.
Major Kickback action
IRS believes that CDR, Bank of America and others have colluded to fix pricing - 2 November 2009,

http://www.sott.net/articles/show/208875-Conspiracy-of-Banks-Rigging-States-Came-With-Crash
Conspiracy of Banks Rigging States Came With Crash
18 May 2010 - Martin Z. Braun and William Selway
...
"The whole investment process was rigged across the board," said Charlie Anderson, who retired in 2007 as head of field operations for the Internal Revenue Service's tax-exempt bond division. "It was so commonplace that people talked about it on the phones of their employers and ignored the fact that they were being recorded."

Anderson said he referred scores of cases to the Justice Department when he was with the IRS.
He estimates that bid rigging cost taxpayers billions of dollars.
Anderson said prosecutors are lining up conspirators to plead guilty and name names.

In exchange, the government promised in an amnesty agreement not to prosecute the bank. Bank of America spokeswoman Shirley Norton in San Francisco said in an e-mail the firm is continuing to cooperate.
...
CDR helped arrange deals in which financial firms took millions of dollars in profits from GICs, Bloomberg News reported in October 2006. Almost all of the deals were shams: As much as $7 billion in bond-issue proceeds were invested in GICs but never spent for the intended purpose of providing services to taxpayers.

CDR signed off on interest-rate swaps to municipalities, as banks took hidden fees sometimes 10 times as much as they charged on fixed-rate bond deals, according to data compiled by Bloomberg. For the public, the swaps were fraught with risks.

In the past decade, banks have peddled swaps the world over, from Jefferson County, Alabama -- which was forced to the brink of bankruptcy -- to the hill towns of the Umbria region of Italy. Many of these swaps soured when the credit crisis began in 2007.

Getting Out

Dozens of municipalities have paid banks billions to get out of swap contracts. The agency that oversees the San Francisco-Oakland Bay Bridge said it spent $105 million to escape its deal in July 2009.

"They were gouging the municipalities," said retired IRS investigator Anderson, 59. "Beside the excessive fees, some of the swap deals just didn't work. It was just awful. The same people were involved in the GIC end of the market."

Bid rigging not only cheated cities and towns, it also illegally denied the IRS required taxes from GIC income, Anderson said. The evidence is clear in telephone recordings made on GIC desks, he said. "We could hear people talking about how everyone knew who was going to win the bid. You could tell it was just everyday business."
...
The bid rigging in GIC contracts has reduced public funding for schools and housing across the U.S.

http://www.bloomberg.com/apps/news?pid=20601015&sid=a5siC.rxVbVM
Phony Auctions Fleecing Public Yield Ex-UBS Banker Guilty Plea
By Martin Z. Braun and William Selway

May 20 (Bloomberg) -- When Mark Zaino left a Beverly Hills financial advisory firm in 2001 for the U.S. municipal derivatives desk at UBS AG in New York, he didn’t leave his relationships behind.

On Aug. 16, 2002, he got on the phone with former colleagues at CDR Financial Products Inc. Zaino agreed to funnel a $475,000 kickback to CDR on behalf of Financial Security Assurance Holdings Ltd., known as FSA. The payment was CDR’s reward for manipulating an auction that gave FSA a contract to manage money for Missouri schools, according to Zaino’s guilty plea to fraud and conspiracy charges yesterday and Justice Department records filed in U.S. District Court in Manhattan.

Zaino, 35, became the first Wall Street banker to admit to a role in a conspiracy to pay public agencies below-market returns on investment deals. The Missouri transaction was one of more than 200 that prosecutors say was rigged by banks including Bank of America Corp., JPMorgan Chase & Co. and Zurich-based UBS, according to court records.

“Every time another guy pleads out, it’s just more evidence the government can use at trial; and if you’re his employer, it’s more evidence that it can directly be linked to you,” said Nathan Muyskens, a partner at Shook, Hardy & Bacon in Washington and a former trial attorney with the Federal Trade Commission’s Bureau of Competition.

Antitrust Investigation

The antitrust investigation centers on the auctions for so- called guaranteed investment contracts, known as GICs. Local governments purchased GICs with bond money to receive returns from the borrowed funds until the cash was needed for schools, roads and other public works. While a GIC is similar to a certificate of deposit, its rates aren’t advertised publicly. Instead, towns rely on advisory firms to solicit competing offers.

The Justice Department’s more than three-year investigation is the broadest criminal probe ever of the $2.8 trillion municipal bond market.

In October, a grand jury indicted CDR, founder David Rubin, its former chief financial officer and a vice president for taking kickbacks for running sham auctions for the investments. All three deny wrongdoing. In February and March, former CDR employees Douglas Goldberg, Daniel Naeh, and Matthew Rothman entered guilty pleas and agreed to cooperate in the investigation.

The conspiracy stretched from California to Pennsylvania and involved about 160 state agencies, local governments and non-profits in at least 34 states, according to records filed in connection with the CDR case.

‘Institution A’

UBS was among the 16 banks that participated, according to a Justice Department list of co-conspirators that was filed in court on March 24 and later sealed.

Court documents released yesterday don’t mention UBS by name, saying only that Zaino worked for “Financial Institution A.” That firm is identified as UBS on the Justice Department list. FSA, a unit of Brussels lender Dexia SA at the time of the alleged conspiracy, is also unnamed in the pleadings, which refer to “Provider A.” The list identifies FSA as “Provider A.”

Zaino, who left UBS in 2006, didn’t respond to a message left on his mobile phone seeking comment. Doug Morris, a UBS spokesman, declined to comment. Thierry Martiny, a spokesman for Dexia who previously declined to comment, didn’t respond to an e-mail request for comment after business hours yesterday.

At UBS, Zaino ran bogus auctions for investment deals on behalf of local government clients, delivering the contracts to preferred bidders in exchange for kickbacks, the government said yesterday. He also agreed to submit intentionally losing bids at auctions run by CDR, according to the charges against him.

‘Unearned Fees’

“Kickbacks in the form of inflated or unearned fees were paid to Zaino’s employer and its parent financial institution in exchange for assistance in controlling the bidding process,” the Justice Department said in a statement yesterday.

Zaino also admitted to helping CDR use interest-rate swap trades to hide FSA’s kickbacks for fixing investment deals in FSA’s favor. The illicit payments to CDR were masked as fees for arranging those swaps, according to the government.

On June 22, 2004 -- the day CDR handled the bidding for a $147 million investment by the West Virginia School Building Authority -- CDR fed an FSA banker information about a competitor’s bid, according to Rothman’s guilty plea and the Justice Department’s lists of co-conspirators and transactions involved. That helped FSA pick up the deal at a lower interest rate than it otherwise would have paid, according to Rothman’s guilty plea.

Arranging Transaction

Afterward, FSA entered into a swap with UBS to generate a $55,000 kickback for CDR, ostensibly for arranging the swap transaction, according to Rothman’s plea.

UBS also received payments from Bank of America that were kickbacks, according to civil lawsuits filed by Baltimore and other municipalities who say they were victims of the conspiracy.

Bank of America, based in Charlotte, North Carolina, has been providing prosecutors with evidence since at least 2007, according to filings. The bank agreed to cooperate with the Justice Department’s antitrust division in return for a government promise not to prosecute.

On June 28, 2002, Douglas Campbell, a former municipal derivatives salesman at Bank of America, wrote in an e-mail to his boss, then-managing director Phil Murphy, that he had paid $182,393 to banks and brokers not tied to any particular deals. Among them was UBS, which received $75,000. A copy of the e-mail was contained in a North Carolina lawsuit filed by Murphy against Bank of America in 2003.

Campbell told Murphy that he was “trying to help Mark and Gary.” At UBS, Zaino worked with Gary Heinz, whom the government also lists as a co-conspirator in the CDR case. Heinz didn’t return calls seeking comment.

http://www.sott.net/articles/show/205959-JPMorgan-Lehman-UBS-Named-in-Bid-Rigging-Conspiracy
JPMorgan, Lehman, UBS Named in Bid-Rigging Conspiracy

26 Mar 2010 20:00 EDT
JPMorgan Chase & Co., Lehman Brothers Holdings Inc. and UBS AG were among more than a dozen Wall Street firms involved in a conspiracy to pay below-market interest rates to U.S. state and local governments on investments, according to documents filed in a U.S. Justice Department criminal antitrust case.

A government list of previously unidentified "co- conspirators" contains more than two dozen bankers at firms also including Bank of America Corp., Bear Stearns Cos., Societe Generale, two of General Electric Co.'s financial businesses and Salomon Smith Barney, the former unit of Citigroup Inc., according to documents filed in U.S. District Court in Manhattan on March 24.

The papers were filed by attorneys for a former employee of CDR Financial Products Inc., an advisory firm indicted in October. The attorneys, as part of their legal filing, identified the roster as being provided by the government. The document is labeled "list of co-conspirators."

None of the firms or individuals named on the list has been charged with wrongdoing. The court records mark the first time these companies have been identified as co-conspirators. They provide the broadest look yet at alleged collusion in the $2.8 trillion municipal securities market that the government says delivered profits to Wall Street at taxpayers' expense.


'Sufficient Evidence'

"If the government is saying they are co-conspirators, the government believes they have sufficient evidence that they can show they were part of the conspiracy," said Richard Donovan, a partner at New York-based law firm Kelley Drye & Warren LLP and co-chair of its antitrust practice. Donovan isn't involved in the case.

The government's case centers on investments known as guaranteed investment contracts that cities, states and school districts buy with the money they receive through municipal bond sales. Some $400 billion of municipal bonds are issued each year, and localities use the contracts to earn a return on some of the money until they need it for construction or other projects.

The Internal Revenue Service sometimes collects earnings on those investments and requires that they be awarded by competitive bidding to ensure that governments receive a fair return.

The government charges that CDR ran sham auctions that allowed the banks to pay below-market interest rates to local governments.

CDR Fights Case

CDR, a Los Angeles-based local-government adviser, was indicted in October along with David Rubin, Zevi Wolmark and Evan Zarefsky, three current or former executives. The company and the three men have denied wrongdoing. Since last month, three former CDR employees who weren't charged in the initial indictment have pleaded guilty and agreed to cooperate with the Justice Department.

More than a dozen financial firms are also facing civil suits filed by municipalities over the alleged conspiracy. Yesterday, U.S. District Judge Victor Marrero in Manhattan refused to toss out a lawsuit brought by Mississippi and other bond issuers.

Brian Marchiony, a spokesman for JPMorgan in New York; Doug Morris, a spokesman for UBS in New York; and Danielle Romero- Apsilos, a spokeswoman for Citigroup in New York, all declined to comment. A Societe Generale spokesman, Jim Galvin; Lehman spokeswoman Kimberly MacLeod, and GE Capital spokesman Ned Reynolds in Stamford, Connecticut, also declined to comment. Bank of America spokeswoman Shirley Norton in San Francisco declined to comment. Bear Stearns was bought by JPMorgan in 2008, the same year Lehman Brothers collapsed.

'Absolute Disaster'

Laura Sweeney, a Justice Department spokeswoman in Washington, declined to comment.

Banks may choose to cooperate with prosecutors because in light of the government bailout funds they've received "a guilty plea would just be an absolute disaster for some of these companies," said Nathan Muyskens, a partner at Shook, Hardy & Bacon in Washington and former trial attorney with the Federal Trade Commission's Bureau of Competition.

"There have been antitrust investigations where there have been companies involved that were just never indicted," he said in a phone interview.

At the same time, the government will probably focus on seeking to convict individual bankers, he said.

"When someone goes to jail for five years, that resonates," he said. "When a company pays $200 million, it's simply a balance sheet issue. Jail time is what captures corporate America's attention."

Lawyers' Filing

In a court filing yesterday, defense lawyers said they "inadvertently" included the names of individual and company co-conspirators in a motion asking the court to compel the government to provide more specific evidence of the alleged misconduct. They asked the court to strike the entire exhibit in which the list appears. Judge Marrero granted the request.

The government's probe became public in 2006 when federal investigators raided CDR and two competitors and issued subpoenas to more than a dozen firms. The "co-conspirators" on the list released in court this week also included Wachovia Corp., which was purchased by San Francisco-based Wells Fargo & Co. in 2008. Elise Wilkinson, a Wells Fargo spokeswoman in Charlotte, North Carolina, didn't return a call today seeking comment.

October Indictments

The indictments released in October didn't identify any of the sellers of the investment contracts involved in the alleged conspiracy. They were identified only as Provider A and Provider B. They paid kickbacks to CDR after winning investment deals brokered by the firm, according to the indictments.

The firms did this by paying sham fees tied to financial transactions entered into with other companies, prosecutors said. Kickbacks were paid from 2001 to 2005, ranging from $4,500 to $475,000 each, according to the Justice Department.

According to the list contained in the court filing this week, the investment contracts involved were created by units of GE and divisions of Financial Security Assurance Holdings Ltd., a bond insurer formerly part of Brussels-based lender Dexia SA.

The kickbacks were paid out of fees generated by transactions entered into with two financial institutions that weren't identified in the October court filing. The March 24 list filed by the defense named the two firms as UBS and Royal Bank of Canada.

Dexia Sale

Dexia completed the sale of FSA's bond-insurance business in July to Assured Guaranty Ltd. of Hamilton, Bermuda, while retaining its outstanding investment contracts.

Thierry Martiny, a spokesman for Dexia in Brussels, declined to comment. FSA, based in New York, was the biggest insurer of U.S. municipal bonds in 2007 and 2008.

"We have no comment," said Betsy Castenir, a spokeswoman for Assured Guaranty in New York, in an e-mail response. "Dexia has responsibility for the liabilities of the Financial Products business."

Royal Bank of Canada "has been fully cooperating with the government," Kevin Foster, a spokesman for the bank in New York, said in an e-mailed statement. "We have no knowledge or evidence of wrongdoing by any of our employees."

The case is U.S. v. Rubin/Chambers, Dunhill Insurance Services Inc., 09-CR-01058, U.S. District Court, Southern District of New York (Manhattan).

agentbluescreen:
Seems like "Escape from New York" was somewhat prescient. But in this case all the criminals already live there. Just build a wall and hire some guards to keep them there.

TahoeBlue:
I have yet to see a report of the MAGNATUDE of the NATIONWIDE conspiracy which ran from 1998 until at least November 2006 ! We must be talking BILLIONS of dollars diverted from the public in interest on the public funds! The money diverted to the banks and to PAC's (democrats!) as political pay-off's to cover for the scam.

Notice that as of yet - Rubin who pled "Not Guilty" has yet to be "Found Guilty":

http://www.santafenewmexican.com/Local%20News/CDR-Financial--High-impact-company-has-vague-beginning-in-state
 Monday, January 05, 2009
...
Bloomberg quoted Rubin saying that CDR has advised clients on more than $158 billion in transactions since it was founded in 1986. The article said CDR has "advised local governments on more than $17 billion of derivatives since 2003."

The company originally was called "Chambers, Dunhill, Rubin and Co." — even though there was nobody named Chambers or Dunhill involved with the firm. Rubin "picked those names because he liked the sound of them together," Bloomberg reported.

Bloomberg reported Monday, "The IRS probed whether CDR and banks including Charlotte, North Carolina-based Bank of America Corp. and the former Bear Stearns Cos. of New York conspired to overcharge municipalities such as Atlanta; Fargo, North Dakota; and Johnson City, Tennessee, for contracts to invest bond proceeds and then split the profits."

According to the Center for Responsive Politics in an article published Monday on its Web site, OpenSecrets.org, CDR and Rubin have contributed more than $279,000 to campaigns at the federal level since 1991.

http://online.wsj.com/article/BT-CO-20100519-711607.html
MAY 19, 2010,
Three former CDR executives, including its founder David Rubin, were indicted in October on conspiracy and fraud charges. They have denied wrongdoing and are awaiting trial.

As part of a bill of particulars in Rubin's case, prosecutors listed more than a dozen banks and investment firms as suspected co-conspirators. The list was inadvertantly filed in their court case in March and has since been removed from the electronic case docket.


--- Quote --- In October, a grand jury indicted CDR, founder David Rubin, its former chief financial officer and a vice president for taking kickbacks for running sham auctions for the investments. .

In February and March, former CDR employees Douglas Goldberg, Daniel Naeh, and Matthew Rothman entered guilty pleas and agreed to cooperate in the investigation
--- End quote ---

http://abcnews.go.com/Blotter/Politics/story?id=6586275&page=1
Funds Tie Obama to Richardson Probe Figure
Embattled Executive David Rubin Gave Thousands to Campaign
By JUSTIN ROOD  - Jan. 6, 2009

President-elect Barack Obama took big money from a man at the center of a federal probe that has forced one of Obama's top Cabinet picks to withdraw.

Financial records show the Obama campaign got more than $30,000 from California financier David Rubin, the target of an investigation into donations and possible "pay-to-play" deals involving New Mexico Gov. Bill Richardson, Obama's pick for commerce secretary.

Richardson removed himself from consideration for the post Sunday, saying the ongoing grand jury investigation threatened to hold up his confirmation. Richardson and Rubin have both denied any wrongdoing in the matter, which involved contributions and state business in 2003 and 2004.


http://www.bloomberg.com/apps/news?pid=20601087&sid=auHFr7xQK9lg

Secret Bond Deal Led IRS to Middleman Financing in the Dark - Nov. 2 2009 (Bloomberg
...
“IRS believes that CDR, Bank of America and possibly others may have colluded to fix pricing,” an unidentified Atlanta employee wrote in an undated internal memorandum after city authorities met with IRS investigators in September 2005.

CDR-sponsored transactions   from California to Florida diverted millions of dollars from local governments and the U.S. Treasury to banks and advisers, including more than $3 million in Fargo, North Dakota, alone, government records show. The firm is also alleged to have taken “kickbacks” of as much as $475,000 for brokering investment-management contracts, according to the criminal indictment. Bloomberg News obtained documents related to state and federal investigations in response to 30 public records requests and conducted more than 100 interviews.

“This represents another in a long line of recent examples in which taxpayers end up the losers"

http://www.bondbuyer.com/issues/118_215/cdr-fraud-trial-1003620-1.html
Rubin, 2 Others In Court - Plead Not Guilty, Say No Flight Risk -  November 9, 2009

He also suggested that a five-year statute of limitations will lead to the removal of some of the charges

A federal magistrate judge in Manhattan set bail for Rubin at far less than U.S. attorneys ­requested.

Meiklejohn sought bail of about $25 million for Rubin, arguing that the government believes he owns far more than the $15 million to $20 million in assets his attorneys have reported, and that he is a flight risk.

Meiklejohn told the judge that the government is “ignorant” of the full scope of Rubin’s assets. She warned that he may have multiple passports because he is a naturalized American citizen and noted that he often flies to Israel, as recently as last month, where he appears to own a house and visit a son.
...
Ultimately, the judge set bail for Rubin at just $5 million, of which $250,000 had to be posted up front in cash and an additional portion tied to the equity in his California home.

http://www.thepinkflamingoblog.com/2009/01/08/who-is-david-rubin-cdr-why-should-obama-be-very-afraid-part-iv/
Who Is David Rubin & CDR & Why Should Obama Be Very Afraid? Part IV - January 8, 2009
...
New Mexico is another place that’s been lucrative for CDR. In October 2003, Rubin gave $25,000 to Moving America Forward Inc., a PAC formed by Governor Bill Richardson. Seven months later, CDR gave $75,000 to ¡Si Se Puede! Boston 2004 Inc., Spanish for Yes, We Can, another Richardson PAC. That PAC was formed to help pay expenses for his campaign staff at the 2004 Democratic National Convention in Boston.
...
Between the timing of those contributions, CDR made $951,566 advising the New Mexico Finance Authority on $420 million of interest rate swaps. Jon Goldstein, a spokesman for Richardson, says the governor had no role in CDR’s selection.

[ CONnection to Money "Bundling" : ]

JPMorgan paid Michael Stratton, president of Denver-based Stratton & Associates, $269,000 in 2003 and 2004 to help win public finance business relating to “state, county, and local government and corporate entities” in New Mexico

Stratton, 54, worked over the past two decades for Democrats who included former President Bill Clinton, former Massachusetts governor and presidential candidate Michael Dukakis and former Colorado Governor Roy Romer, according to the Stratton & Associates Web site.

Stratton also was a so-called “bundler” for Richardson’s presidential run

No one has been charged with wrongdoing. Stratton declined to comment on the investigation, as did Tasha Pelio, a spokeswoman for JPMorgan in New York. Gilbert Gallegos, a spokesman for the governor, didn’t return calls seeking comment.

http://jta.org/news/article/2009/01/06/1002011/day-school-president-part-of-richardson-investigation
January 6, 2009
...
David Rubin, board chairman of the Orthodox Yavneh Hebrew Academy, is also the CEO of CDR Holdings, which is under federal grand jury investigation for an alleged "pay-to-play" deal to acquire a New Mexico government contract worth $1.48 million.

[ Notice Daniel Naeh did his rigging from Israel: ]

http://www.bondbuyer.com/news/-1012329-1.html
Fourth Market Participant Pleads Guilty in CDR Case - Wednesday, May 19, 2010
...
Three other former CDR employees have pleaded guilty to criminal charges and have agreed to cooperate with investigators. They are Matthew Adam Rothman and Douglas Alan Goldberg, former CDR vice presidents, and Daniel Naeh, who has not worked for the firm in years but was living in Israel and acting as a bidding agent on muni deals.

http://www.justice.gov/opa/pr/2010/February/10-at-193.html
Wednesday, February 24, 2010
...
Daniel Moshe Naeh, also known as Dani Naeh, of Israel, engaged in separate bid-rigging and fraud conspiracies with companies that provide a type of contract, known as an investment agreement, to state, county and local governments and agencies throughout the United States.

Naeh admitted that, as a part of the bid-rigging conspiracy, from as early as 1998 until at least November 2006, he and other co-conspirators designated in advance which co-conspirator providers would be the winning bidder for certain investment agreements and submitted or caused to be submitted to CDR intentionally losing bids. According to the court documents, kickbacks in the form of fees that were inflated or unearned were paid to CDR in exchange for assistance from Naeh and other CDR co-conspirators in controlling the bidding process and ensuring that certain co-conspirator providers won the bids they were allocated.

Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-264-0390 or visit http://www.justice.gov/atr/contact/newcase.htm, or the FBI at 212-384-5000.

http://www.bloomberg.com/apps/news?pid=20601015&sid=aT0A8vQeMErw
Oct. 30 (Bloomberg) 2009
“This case is fundamentally about collusion, the illegal rigging of a purportedly competitive bidding process,”
...
The government alleges the conspiracy started in 1998 and continued until November 2006, the same month CDR was raided by the FBI.
...
The allegations are reminiscent of the yield-burning scandal of the 1990s, when Wall Street banks overcharged local governments for Treasury bonds they purchased with bond proceeds.

Securities firms agreed to pay more than $170 million to settle SEC allegations of yield burning.

Continuing Investigation

The Justice Department’s investigation into bid-rigging is continuing.

Bank of America Corp. in 2007 agreed to cooperate with the department in exchange for leniency.

Others, including

JPMorgan Chase & Co. and UBS AG, have disclosed they may face charges by the Justice Department or the Securities and Exchange Commission in connection with the probe.

The allegations of profiting at taxpayer expense come as local governments suffer from the fallout of the U.S. recession and the lingering impact of interest-rate derivative deals that firms such CDR advised them to enter.

“In a climate of economic austerity, the conduct of the defendants and co-conspirators seems particularly predatory,” Demarest, the FBI official, said.

A bid-rigging count against Rubin and the other employees carries a maximum 10-year prison term, prosecutors said. Other charges in the case include conspiracy, wire fraud, making false statements and a fraudulent bank transaction count. Not every defendant is accused of each crime.

CDR faces a maximum fine of $100 million for bid-rigging.

TahoeBlue:
Has anyone seen any TV story on CNBC(GE) , Bloomberg or CNN, Fox, ABC/CBS/NBC regarding the CDR - Rubin story? 60 minutes? I think not.

One thing is clear - the "Housing / Derivatives scam" of this decade is just a continuation of the scams from last decade.


--- Quote --- The allegations are reminiscent of the yield-burning scandal of the 1990s, when Wall Street banks overcharged local governments for Treasury bonds they purchased with bond proceeds.
--- End quote ---
 

Its complicated, see:

http://www.phillipsandcohen.com/CM/Articles/Articles158.asp
Wall Street’s Yield-burning Fraud - July 2000
...
“Yield burning” refers simply to the artificial lowering of a security’s yield by pricing it in excess of its fair market value. Yield and price have an inverse relationship:   As the price of a security goes up, its yield goes down.
...
In the period between 1990 and 1995, Wall Street investment banks consistently overpriced Treasury securities purchased for municipal advance refunding escrows on a sole-source, noncompetitive basis.
...
In April of 1999, the majority of the yield burning cases were settled. Seventeen regional and national securities firms agreed to pay a total of $140 million to resolve the charges — bringing the total damages to date to nearly $180 million.

The most recent defendants to settle are:  Salomon Smith Barney, PaineWebber Inc.; Dain Rauscher Inc.; Warburg Dillon Read LLC; First Union Securities Inc.; Prudential Securities Inc.; Edwards & Sons Inc.; Goldman, Sachs & Co.; Merrill Lynch, Pierce, Fenner & Smith Inc.; Lehman Brothers Inc.; William R. Hough & Co.; Raymond James & Associates Inc., Morgan Stanley Co. Inc.; U.S. Bancorp; Piper Jaffray Inc.; Credit Suisse ; First Boston Corp.; J.C. Bradford & Co.; and Southwest Securities Inc.

[ Similar scams of the 1990's: ]

http://www.uow.edu.au/~bmartin/dissent/documents/health/citissb.html
...
Bond Rigging scandal - Wall Street 1991

There was a large Wall Street scandal involving collusion and price fixing at government bond auctions over a 10 year period. Salomon brothers, then an independent group were the ring leaders and were lucky to survive. They admitted the conduct and fired senior staff blaming them. Other groups including Citicorp were then investigated.
...
Securities fraud, price fixing, collusion 1994-99

Smith Barney was one of 31 banks involved in a large fraud scandal involving price fixing and other collusive practices. This was an ongoing and ever widening fraud investigation that started in 1994 "when an academic study claimed that patterns of trading suggested "tacit collusion" between market participants"

The reports indicated 3 phases. A justice department settlement in 1996 which included regulatory changes, a US $1 billion civil settlement in 1997, and a SEC settlement in January 1999. There were complaints that the civil settlement was too low because so many millions of investors lost money

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