Former Bank of America exec Murphy sentenced for bid-rigging

A former Bank of America executive has been sentenced to more than two years in prison for participating in a bid-rigging scheme involving contracts to invest municipal bond proceeds, the U.S. Department of Justice announced Monday.

Phillip D. Murphy, who once worked in Charlotte as the bank’s managing director of municipal derivatives products from 1998 to 2002, was sentenced to 26 months by U.S. District Judge Max Cogburn.

Murphy pleaded guilty in February 2014 after a wide-ranging government investigation of the U.S. municipal bond market. The probe has resulted in 16 other people being convicted or pleading guilty, including former Bank of America employees who worked at the bank’s offices in Charlotte, New York and Chicago.

Prosecutors say Murphy participated in multiple fraud conspiracies and schemes with various financial institutions and brokers from as early as 1998 until 2006.

Murphy and others manipulated the bidding process for winning the investment contracts, prosecutors say. Under the scheme, Murphy and co-conspirators agreed to have kickbacks paid to others who helped manipulate the bidding process, according to prosecutors.

Bank of America boosted its profits from the contracts by paying artificially determined and suppressed low interest rates, prosecutors have said.

Bank of America spokesman Bill Halldin declined to comment.

The charges against Murphy are related to a sweeping government investigation of the municipal bond industry. In 2010, various federal agencies and nearly two dozen states announced a $137 million settlement with the bank for its role in a scam authorities said defrauded state agencies, cities and nonprofits seeking to invest with banks money they borrowed through bond offerings for hospitals and other projects.

That settlement resulted from a 2007 leniency agreement the bank reached with the Justice Department that spared the bank from criminal prosecution. Bank of America, which officials then said was the first and only company to self-report its activities in the probe, paid restitution but no fines after it approached the Justice Department, prompting the investigation.

This story was originally published May 18, 2015 at 7:16 PM with the headline "Former Bank of America exec Murphy sentenced for bid-rigging."