Bankers Back on Wall Street Despite Major Crimes

by Vins

A story that spans a decade has come to an unfortunate, but not surprising, end. Three former General Electric bankers, Dominick Carollo, Steven Goldberg and Peter Grimm, had been convicted in 2012 for rigging auctions of municipal bonds, thus stealing from projects to build schools, hospitals, libraries and nursing homes in virtually every U.S. state.

However, in November 2013, those convictions were reversed on a technicality: basically, that federal prosecutors took so long to build the massive case that the statute of limitations ran out. The three men were released from prison the next day—just in time, as a defense attorney sanctimoniously noted, to be home for Thanksgiving dinner.

These men were part of a decade-long scheme that bilked cities and towns of funds for public-works projects by paying kickbacks to brokers and manipulating bids. Between August 1999 and November 2006, Carollo, Goldberg and Grimm participated in countless rigged bids via telephone. Like Mafiosi, they used a secret language and code words to keep their underground business low-key. Prosecutors accumulated over 570,000 recorded phone conversations that directly linked the men to fraudulent activity. Evidence at trial established that they cost municipalities around the country millions of dollars.

This type of white-collar immorality is a major issue because the money stolen could have been used by cash-strapped towns to provide essential services. Matt Taibbi of Rolling Stone called this fraud the equivalent of robbing a church fund to pay for lap dances. Taibbi, however, is one of the few reporters to consistently inform the public on these crimes and to point out the perhaps-insurmountable obstacles faced by even an activist U.S. Justice Department in getting convictions. “It really is hard to put these guys away,” Taibbi writes. “It’s even harder to keep them there.”

Sources:

Max Stendahl, “Former GE Execs Freed From Prison After Convictions Nixed,” Law360, November 27, 2013, http://www.law360.com/articles/492222/former-ge-execs-freed-from-prison-after-convictions-nixed.

Matt Taibbi, “Another Batch of Wall Street Villains Freed on Technicality,” Rolling Stone, December 4, 2013, http://www.rollingstone.com/politics/blogs/taibblog/another-batch-of-wall-street-villains-freed-on-technicality-20131204.

Additional Sources:

Matt Taibbi, “The Scam Wall Street Learned From the Mafia,” Rolling Stone, June 21, 2012, http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-from-the-mafia-20120620.

Chad Bray, “Three Sentenced in Bid-Rigging Case,” The Wall Street Journal, October 18, 2012, http://online.wsj.com/news/articles/SB10000872396390444734804578064903311016908.

“Three Former Financial Services Executives Convicted for Roles in Conspiracies Involving Investment Contracts for the Proceeds of Municipal Bonds,” United States Department of Justice, May 11, 2012, http://www.justice.gov/opa/pr/2012/May/12-at-620.html.

Bob Van Voris, “Ex-GE Bankers Win Reversal of Convictions for Bid-Rigging,” December 2, 2012, Bloomberg, http://www.bloomberg.com/news/2013-12-02/ex-ge-bankers-win-reversal-of-convictions-for-bid-rigging.html.

Student Researcher: Markisha Barber (Frostburg State University)

Faculty Evaluator: Andy Duncan (Frostburg State University)