Cities, counties, school districts, even some non-profit organizations will benefit from a multistate settlement against Bank of America.

Bank of America has agreed to pay $67 million to settle charges brought against it by Missouri, several other states and the Justice Department. The money flowing to the states is part of the larger, $137 million Bank of America settlement with several federal agencies.

Attorney General Chris Koster says Bank of America defrauded local governments, school districts and non-profits in the purchase of municipal bond derivatives.

“There are about 50 entities that are going to be receiving money through this settlement,” Koster says. “And each entity is different. Some of them are small school districts. Some of them are county governments. But about $2.6 million is going to be returned to investors that had been bilked through this anti-trust scheme that Bank of America entered into.”

Justice Department officials say Bank of America received leniency, because it stepped forward voluntarily. Bank of America began as early as 1998 to rig bids and fix the rate of return on municipal bond derivatives, depriving the local governments, school districts and non-profits from receiving the full return they should have expected. Governments and non-profits typically use derivatives to reinvest proceeds of tax-exempt bond offerings until the money is needed or as a hedge against fluctuations in interest rates.

The Attorney General’s office reports that between 1998 and 2003, Bank of America and other financial firms and brokers conspired to rig bids, enriching the brokers at the expense of the client.

Koster says this isn’t the end of the investigation into fraud in the municipal derivative investment market.

“I think that it was larger than this and the investigation continues. My sense is that Bank of America and this settlement that we’re seeing here today is the first of several dominoes to drop in this investigation,” Koster says. “It’s too early to publicly announce where the investigation is going from here, but it isn’t over.”

AUDIO: Brent Martin reports [1:15 MP3]