charged CDR Financial Products and its founder and chief executive, David Rubin,

charged CDR Financial Products and its founder and chief executive, David Rubin, with secretly manipulating the competition among banks and other investment firms for the lucrative business of helping governments raise money. The indictment said the participating banks then kicked back part of their profit to Mr. Rubin and his firm.The charges were the first in a wide-ranging antitrust investigation of the municipal bond business that has been in progress for several years. Federal investigators in New Mexico had previously looked at CDR’s involvement in bond sales in that state, as well as its contributions to Gov. Bill Richardson. The attention prompted Mr. Richardson to withdraw from consideration as President Obama’s commerce secretary, but the government eventually decided not to pursue criminal charges against him.From at least the late 1990s, the indictment said, Mr. Rubin and his firm, based in Beverly Hills, engaged in a variety of schemes that shortchanged the Internal Revenue Service and imposed hidden costs on local governments. In some cases, they increased their profit by adding derivatives to the bond transactions,only to have the derivatives sour, leaving local governments with unexpected bills.
Two other CDR executives, Zevi Wolmark, the former chief financial officer, and Evan Andrew Zarefsky, a vice president, were also indicted. All three men are residents of California, but their firm worked nationwide.A spokesman for Mr. Rubin and CDR, Allan Ripp, said, “The allegations that the government is making are a fiction.”
“There is no way that CDR could have been carrying out the kind of dramatic conspiracy that is alleged,” Mr. Ripp added. He said he was unable to respond to individual charges because the activity dated back many years and the indictment did not identify those suspected of conspiring.
“It’s hard to connect the dots,” Mr. Ripp said.
A lawyer for Mr. Zarefsky, Daniel L. Zelenko, said, “the government just doesn’t understand the municipal bond industry, and these charges show that. Mr. Zarefsky did absolutely nothing wrong.”Municipal bonds, which are issued by states as well as municipalities, are a primary means for governments to finance their operations. The interest on the bonds is tax-exempt, so the I.R.S. has special rules for how the money is handled.The indictment said CDR and its co-conspirators routinely violated those rules and subsequently certified falsely that the transactions had followed the rules.Local governments that took the certifications at face value ended