School Districts, Local Governments to Receive More Than $8.4M in First Phase of Bank of America Bid-rigging Settlement

HARRISBURG – Thirty school districts, county governments and other municipal organizations across Pennsylvania will receive more than $8.4 million this week during the first phase of payments from a national bid-rigging settlement with Bank of America.

Attorney General Tom Corbett said the funds are being wire-transferred this week to government agencies who were allegedly victimized by a national scheme that artificially increased their investment costs and reduced their rate of return.  This week’s payments are from the federal portion of the Bank of America settlement, which involved the Securities and Exchange Commission (“SEC”), the Office of the Comptroller of the Currency (“OCC”). 

The settlements are the result of a broad and ongoing national investigation into the marketing and sale of municipal derivative investments, which are often used by government agencies and non-profit organizations to reinvest the proceeds of tax-exempt bond offerings.

According to the settlement agreement, between 1998 and 2003 Bank of America along with other financial institutions and brokers allegedly rigged bids, received and provided “last looks” on bids and submitted non-competitive “courtesy” bids on investments. The alleged schemes enriched financial institutions or brokers – causing state, local and non-profit entities to enter into contracts that cost more or earned less than they should have received in a competitive marketplace.

Pennsylvania recipients for funds from the SEC and OCC portions of the settlement with Bank of America include: Avonworth School District  ($91,603.44); Cameron County School District ($160,452.35); Downington Area School District ($1,097,576.10); Fort LeBoeuf School District ($44,211.68); Hamburg Area School District ($39,058.28); Harbor Creek School District ($39,630.73); Hempfield School District  ($114,547.86 ); Millcreek Township School District ($147,057.04); Millville Area School District ($28,245.84); North Penn School District ($34,504.09); Norwin School District  ($198,146.84); Penns Valley School District ($45,491.67); Pine-Richland School District  ($291,062.55); Pittston Area School District ($187,219.81); School District of the City of Scranton ($1,440,152.40); Slippery Rock School District ($147,480.37); Sto-Rox School District  ($608,883.21); St. Mary’s Area School District ($35,226.10); Upper Dauphin School District ($162,920.73); County of Chester  ($320,725.83); County of Lehigh ($460,865.15); County of Luzerne ($127,829.30); County of Montgomery  ($1,991,694.04); County of Northumberland  ($31,026.97); Allegheny County Airport Authority ($98,462.00); City of Allentown ($117,090.43); Carnegie Borough ($121,743.93); Springfield Township Sewer Authority ($92,589.20); Township of Moon ($33,290.47) and the Township of Ross ($103,362.49).

Corbett noted that an additional $4 million in restitution has been secured by the state portion of the Bank of America settlement.  Those funds will be distributed in the near future to more than 100 Pennsylvania government agencies and non-profit organizations.

“These federal and state settlements are returning millions of dollars to local government agencies across the state who tried to do the right thing – making investments to earn additional money for their citizens,” Corbett said. “Unknown to them, Bank of America and the other co-conspirators had created a complex scheme to rig bids and avoid competition, designed to generate additional profits for brokers and financial institutions

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