Four federal agencies and 20 states on Tuesday announced a sweeping $137 million settlement with Bank of America for its role in a bid-rigging scheme that played out at the Charlotte bank and other major financial institutions.
Authorities said the conspiracy defrauded state agencies, cities and towns, and nonprofits that sought to invest with banks the millions they borrowed through bond offerings for hospitals, apartment complexes and other projects. The practices occurred from 1998 through 2003, the bank said.
The settlement, which includes $3.4 million for North Carolina, is the result of a 2007 leniency agreement Bank of America reached with the Department of Justice, which spared it from criminal prosecution in return for its cooperation. Bank of America is paying restitution but no fines.
Federal agencies and states are continuing a broad civil and criminal probe of individuals at Bank of America, other major financial institutions and brokers in connection with the marketing and sale of the investments, the N.C. Attorney General said. The investigation has resulted in criminal actions against seven individuals and one company, plus guilty pleas against eight others, including a former Bank of America employee.
"This ongoing investigation has helped to expose wide-spread corruption in the municipal reinvestment industry," said Robert Khuzami, director of enforcement at the Securities and Exchange Commission, one of the agencies in the probe. "The conduct was egregious - in return for business, the company repeatedly paid undisclosed gratuitous payments and kickbacks and affirmatively misrepresented that the bidding process was proper."
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