CDR Financial Products Inc. of Beverly Hills, its founder and two other employees of the advisory firm were indicted Thursday by a federal grand jury on charges of conspiring to rig bidding on investment contracts sold to local governments.
The indictment in U.S. District Court in New York alleges that CDR and its employees, who ran the auctions for the investment work, awarded the deals to favored firms in exchange for kickbacks. The government alleges that the conspiracy cost taxpayers by allowing the banks to pay below-market rates.
"The Justice Department is committed to protecting the competitive process and will hold accountable individuals and companies who participate in illegal and anticompetitive conduct," Assistant U.S. Atty. Gen. Christine Varney, who heads the antitrust division, said in a statement.
Indicted were CDR founder David Rubin; Zevi "Stewart" Wolmark, CDR’s former chief financial officer and managing director; and Evan Zarefsky, CDR’s vice president. The charges are the first to result from a more than three-year investigation into the municipal bond market that has drawn in more than a dozen banks, insurers and local government advisors.
Allan Ripp, a spokesman for CDR, said the firm hasn’t had a chance to fully review the complaint. He dismissed allegations that the firm participated in a conspiracy. Rubin’s attorney, Donald Etra, said his client would defend against the charges.
"We believe the indictment has no merit," Etra said. "The bottom line is that David Rubin did nothing wrong."
…According to the indictment, the CDR employees decided who would win investment contracts in advance and solicited sham bids from other institutions to cover it up. In exchange, according to the indictment, the firm received kickbacks, masked as fees for other transactions, on at least 10 occasions from 2001 to August 2005. The amounts ranged from $4,500 to $475,000, according to the indictment.
A bid-rigging count against Rubin and the other employees carries a maximum 10-year prison term, prosecutors said.
David Rubin is the (former?) chairman of the board of the Yeshivat Yavneh day school in Hancock Park. An Orthodox Jew, he’s prominent in Orthodox life in the Fairfax/La Brea/Hancock Park community. He is a cigar buddy of the Orthodox Union CEO Steven Weil, the former rabbi of Beth Jacob who was famous for his no-predators policy.
Rubin’s wife is battling severe cancer.
To David Rubin, chairman of Yeshivat Yavneh, a 450-child day school in Hancock Park, the issue is trust.
"Although I support the concept of preservation, I don’t support the process of local empowerment on this issue in our community," Rubin said. "We can’t have an HPOZ controlled by a small group that has developed a double standard."
Rubin says neighbors are much tougher on Yavneh than they are on Marlborough School, a private girls’ school in the area.