CHARLESTON, W.Va. -- The state Economic Development Authority has received a $358,000 check as part of a national settlement between the owners of Wachovia Bank and 26 state attorneys general to cover a national municipal bond bid-rigging scheme.
David Warner, executive director of the development authority, said the settlement covers a 2002 bond issuance to raise revenue for the Stonewall Jackson Lake State Park project.
Warner told members of the authority board Thursday that his office was contacted last year to inform them one of their bond issuances may have been affected during the course of an eight-year fraud scheme.
"There was some bid-rigging involved on the national level," Warner said. "We were notified that we had at least one bond issue that may have been negatively impacted by this activity."
According to the U.S. Securities and Exchange Commission, between 1997 and 2005 Wachovia generated millions of dollars in illicit gains by fraudulently rigging at least 58 municipal bond reinvestment transactions in 25 states and Puerto Rico.
According to regulators, these actions undermined the competitive bidding process but negatively affected the prices that municipalities paid for derivative products related to the bond sale.
Warner said the specific derivative dealing with the authority's case was a guaranteed investment contract, or GIC, associated with the Stonewall bond sale.
Wells Fargo acquired Wachovia for $15 billion in late 2008.
Warner said the money would go to the trustee in the Stonewall bond sale, United Bank. It will be up to the bank to determine how the proceeds from the settlement are distributed among bondholders.