Time magazine reprises local loss in iffy investment; ties it to Goldman Sachs deal that has it in fight with SEC

CEDAR RAPIDS - Time magazine reports that an investment made in 2007 by the city of Cedar Rapids on behalf of the Cedar Rapids/Linn County Solid Waste Agency was tied to the now-infamous bond deal called Abacus, which has investment bank Goldman Sachs in court with the U.S. Securities and Exchange Commission.

The SEC says Abacus was rigged to fail with those doing the rigging making a fortune because they knew it would fail and bet against it.

The city solid waste agency reported back in 2008 that it had made a short-term investment in commercial paper called Rhinebridge LLC that very quickly defaulted before it was slated to pay $6 million at maturity in October 2007.

In the end, the Rhinebridge LLC assets were sold at auction and the agency's final loss was limited to $2.639 million.

The city and the agency filed a lawsuit in June 2008 against Wells Fargo Brokerage Services LLC, which sold the city the Rhinebridge LLC investment. The lawsuit also involved a second investment by the city of Cedar Rapids, which was supposed to have paid the city $2 million before it defaulted in 2007. The $2-million investment was in something called Golden Key Ltd.

The Time magazine headline was a catchy one: “How Goldman Trashed a Town.”

The reference was to the city/county solid waste agency, a trash and recycling operation, that got hurt by Goldman's Abacus.