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 James Hertz, 56, pleaded guilty to wire fraud and conspiracy charges
in 2010 and cooperated in a wide-ranging investigation of the $3.7
trillion U.S. municipal bond market. The probe resulted in numerous
convictions and got five large financial institutions to pay about
$743 million in restitution, disgorgement and penalties.
In sentencing him to no prison time and no probation, U.S. District
Judge Kimba Wood in New York noted Hertz's cooperation with the
government and his "unblemished" character aside from the crime in
question.
Prosecutors say that from 2001 to 2006, Hertz and others engaged in
bid-rigging, determining in advance whose employer or institution
would win contracts for investment and other municipal finance
activities.
Court documents said that from 1998 to 2006, Hertz also received
details about competitors' bids from a Minnesota broker in violation
of U.S. Treasury Department regulations.
Hertz was the eighth of 13 people to plead guilty as part of the
investigation and the first from JPMorgan, which agreed in 2011 to
pay $228 million to settle federal and state bid-rigging
investigations.
Another JPMorgan employee, Alexander Wright, pleaded guilty in 2012
to one count of conspiracy to commit wire fraud. He was sentenced in
October to one year probation.
As part of his cooperation deal, Hertz testified the trial of three
former UBS AG <UBSN.VX> bankers: Peter Ghavami, Gary Heinz and
Michael Welty. They were convicted on conspiracy and fraud charges
stemming from the bid-rigging probe.
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The ex-UBS bankers were sentenced in July to prison terms ranging
from 16 to 27 months.
In total, 16 people have been convicted as part of the bid-rigging
investigation. Phillip Murphy, a former executive at Bank of America
Corp <BAC.N>, is to face trial in February in Charlotte, North
Carolina, on charges stemming from the probe.
The Justice Department obtained three other convictions in 2012 of
three former bankers at General Electric Co's <GE.N> GE Capital
unit: Steven Goldberg, Dominick Carollo and Peter Grimm. But a
federal appeals court vacated their convictions, saying the
government waited too long to prosecute.
The case is U.S. v. Hertz, U.S. District Court, Southern District of
New York, No. 10-cr-01178.
(Reporting by Nate Raymond and Joseph
Ax; editing by David Gregorio)
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