Phillip D. Murphy was the managing director of Bank of America’s municipal derivatives products desk in the late 90’s and early 2000’s. Yesterday, he pleaded guilty to defrauding the government before U.S. District Judge Max O. Cogburn and faces potentially 40 years in prison and over $1 million in fines.
“The bid rigging drains our local cities of money they need to provide essential services,” commented Peter Mougey, a shareholder with the Levin, Papantonio law firm and director of the firm’s Business Torts and Securities Litigation Department. “This is just another example of the uneven playing field for market participants. Even the bids are fixed.”
“This money was simply stolen by Wall Street from our local communities,” says Mougey.
During Murphy’s time at the desk, he conspired to make false statements and reports that benefited business by winning them government contracts. The process is intended to leverage competitive bids to get the best price for municipalities and other public entities.
According to the Department of Justice, Murphy began his scheme in 1998 and continued until as late as 2006. Specifically, Murphy and his co-conspirators worked to “increase the number and profitability of investment agreements and other municipal finance contracts awarded to Bank of America.”
“It’s a betrayal of the entire system,” Mr. Mougey added.
Bidding for government contracts is a process that is supposed to be competitive. Conspiring with the employees of Rubin/ Chambers, Dunhill Insurance Services (CDR) was a violation of U.S. Treasury regulations. These collaborations between the former Bank of America executive and CDR employees result in purposefully losing bids being submitted and won the company contracts it otherwise should have not gained.
“Mr. Murphy’s ripped off hard working American taxpayers and cash-strapped municipalities all in pursuit of his own lucre,” George Venizelos, Assistant Director in Charge of the FBI’s New York Field Office, said. “Let this serve as a reminder to others who are entrusted to act in the public’s best interest; your lack of candor won’t go unnoticed.”