An investigation by the Federal Bureau of Investigation and the U.S. Attorney for the Western District of Texas focused initially on vendor kickbacks and has involved several local elected officials and business leaders, some of whom were involved in overseeing bond-related matters for the city and area school districts. Some of the local officials have pleaded guilty in the case.
The latest El Paso pleadings come as federal officials pursue a yearlong nationwide criminal probe into alleged widespread bid-rigging in the municipal bond industry. Several Wall Street firms that underwrite the deals as well as insurers that handle part of the business have reported receiving subpoenas.
It isn't clear how the El Paso case, which is still open, is related to other parts of the bid-rigging investigation.
Many details of the El Paso case remain under seal. Documents filed in one of the first parts of the case to become public include references to meetings earlier this year at which the Bear Stearns bankers, not identified by name, discuss paying for a personal trip to New York for one local official implicated involved in the case and his wife. The documents also describe local officials' discussions allegedly seeking bribes from another financial firm handling local bond deals, First Southwest Co., of Dallas, in order to keep their county contract. First Southwest was later fired, prosecutors suggest in court papers, for refusing to pay.
Russell Sherman, a Bear Stearns spokesman, said the men are no longer employees, adding, "Bear Stearns is not the subject of the inquiry. We will continue to cooperate with the authorities regarding this matter."
First Southwest CEO Hill A. Feinberg on Friday said the company has been assured that it isn't a target of the El Paso public-corruption investigation. "We remain ready, willing, and able to cooperate with the federal government, if contacted," he said.
