WASHINGTON - A federal appeals court panel will hear oral arguments on May 15 in the case of three convicted bid riggers seeking to have their convictions overturned.
The U.S. Court of Appeals for the Second Circuit in New York set that date for a three-judge panel to hear the arguments of former UBS bankers Peter Ghavami, Michael Welty, and Gary Heinz.
The three men were convicted in a federal district court in Manhattan in August 2012 as part of wide-ranging enforcement actions by the Justice Department over the rigging of bids for guaranteed investment contracts and other muni products that occurred between 2001 and 2006.
Ghavami received an 18-month prison sentence and a $1 million fine last July, while Heinz got 27 months and a $400,000 fine and Welty received 16 months and a $300,000 fine for fraudulent schemes conducted from 2001 to 2006.
The former bankers are separately represented and each has his own argument for the court, but their lawyers have also joined in the arguments of each other. The former bankers say that the case against them should have been time-barred because the government did not act within a five-year statute of limitations for wire fraud, and that the district court was wrong to rule that a 10-year statute of limitations for fraud affecting a financial institution applied in their case.
General Electric bankers Dominick Carollo, Steven Goldberg, and Peter Grimm, also convicted for GIC bid-rigging, won their appeals in December 2013 after the Second Circuit appeals court found their convictions should have been prevented by an expired statute of limitations.
The UBS former bankers also allege various mistakes undermining their rights at the district court level, including what they said was prejudicial testimony from former UBS banker Mark Zaino, who pleaded guilty in 2010 to a role in the scheme and who escaped punishment after cooperating with the government.
Zaino testified about the meaning of taped telephone conversations which he did not take part in, which lawyers for his former colleagues said violates federal evidence rules. Welty's lawyers also said the government suppressed evidence when it failed to disclose an email that could have cast doubt on the prosecution's case.
The government's lawyers have told the appeals court that the convicted former bankers conceded that their crimes affected UBS in order to prevent the government from presenting evidence to that effect at trial. That should preclude the former bankers from claiming that only a five-year statute should apply and place the question beyond judicial review, the lawyers said.
The appeals court could overturn the convictions, send the case back to the district court for a new trial, or could uphold the convictions. Only the Supreme Court could overturn the appeals court's decision, though in rare cases the full appeals court will re-examine a three-judge panel's decision.
