A former Bank of America Corp. executive pleaded guilty Thursday to participating in a criminal conspiracy to rig the bidding on investments sold to state and local governments to profit at the expense of taxpayers.
The Justice Department said that Douglas Lee Campbell, who is identified as working for "Bank A," pleaded guilty to fraud and conspiracy charges. Campbell worked at Bank of America until 2002, when he joined Piper Jaffray Cos., according to National Association of Securities Dealers records.
This is the second time an investment bank employee has admitted to participating in an industrywide conspiracy to pay state and local governments below-market rates on the investments purchased with bond proceeds. The scheme stretched from California to Pennsylvania and included more than 200 deals involving about 160 state agencies, local governments and nonprofits.
William Halldin, a spokesman for B of A, declined to comment on Campbell's case. He said the Charlotte company was assisting investigators in the probe.
"We have been cooperating with law enforcement for several years on this matter," Halldin said. B of A agreed in 2007 to work with prosecutors in exchange for leniency.
Jennifer A. Olson-Goude, a spokeswoman with Piper Jaffray in Minneapolis, did not immediately return a message. Campbell had left the firm by March 2007.
The investigation centers on guaranteed investment contracts, known as GICs, that municipalities buy with money raised through bond sales. The investments let them earn a return on the cash until the funds are needed for various public works.
Prosecutors have said that favored bankers received inside information from brokers who handled the bidding, so they could carve up the market. The bankers compensated the brokers with kickbacks disguised as fees.
Campbell's plea is the seventh obtained by the government in the probe. In May, former UBS AG employee Mark Zaino became the first Wall Street banker to admit to a role in the conspiracy. Both men have agreed to help prosecutors, the Justice Department has said.
Bank of America fired Campbell in 2002 for making payments to firms that provided "no apparent" services in return, according to his NASD file.