Municipal bonds are issued by governmental or quasi-governmental entities to raisemoney for operating funds or specific projects,
to refinance outstanding municipal debt.(Indictment
13.) Municipal bond issuers typically invest some or all
bond proceeds ininvestment products, which are sold to them by major financial institutions, including banks,investment banks, insurance companies, and financial services companies (collectively,"providers").
15-16.) The returns on municipal bonds are usually tax-exempt; tomaintain tax-exempt status, an issuer will usually select a provider through a
competitive bidding procedure that is designed to comply with federal tax law and Treasuryregulations.
17.) An issuer will often hire a third-party broker to conduct the biddingprocess and ensure compliance with Treasury and IRS regulations.
18.)At all times relevant to the Indictment, Defendants were employed at a financial servicescompany ("FSC") that served as both a provider and a broker
municipal investment products.
Ghavami served as a managing director and co-head
s municipal bond reinvestment andderivatives ("MRD") desk, and Heinz and Welty were vice presidents and marketers
theMRD desk.Counts One and Two charge all three Defendants with conspiracy to commit wire fraudin connection with
role as a provider
investment agreements. Count One alleges thatthe Defendants conspired to defraud municipal bond issuers, the Treasury, and the IRS bymanipulating the bidding process for investment agreements and other municipal financecontracts by horizontally colluding with their counterparts at other providers, in violation
FSC is an unnamed co-conspirator in the Indictment, as is the financial institution that whollyowns the FSC, referred to in the Indictment as Financial Institution
All unnamed coconspirators will be referred to in this Opinion
Order by the pseudonyms assigned to them inthe Indictment.2