A federal jury found the former Managing Director of Jefferies & Co Jesse Litvak guilty of a criminal case related to the US government's Troubled Asset Relief Program or TARP, Bloomberg reported.
Litvak's conviction was unique because it was the only criminal case made against an individual related to TARP, a program which utilized bailout funds to encourage more investments in mortgage-backed securities. After a trial held in a New Haven, Connecticut court before US District Judge Janet C. Hall, a federal jury convicted Litvak of all counts, which included securities fraud, fraud connected to the TARP and making false declarations, the report said.
Assistant US Attorney Eric Glover said about the case, "We're gratified the jury delivered the verdict that it did and justice was served." Litvak's sentence will be given on May 30, the report said.
Prosecutors said Litvak defrauded investors of $2 million because he misrepresented the amount sellers asked for or what clients would pay. He then kept the difference for the investment company. In addition, he also told some buyers that a third-party seller who was non-existent also offered to sell Jefferies bonds. This enabled Litvak to charge extra and still made his trades look profitable when his revenue plunged, according the prosecutors, the report said.
Among the victims that Litvak was said to have defrauded were private investment funds and six funds created in 2009 by the US Treasury Department to help deal with the financial crisis.
Litzvak's camp said they plan to appeal the decision. His attorney, Patrick Smith, said, "Mr. Litvak is obviously very disappointed in the verdict. We plan to appeal. We think the court made several serious errors that undermined Mr. Litvak's ability to present his full defense."
Smith said that the testimony of expert witnesses who would have helped show Litzvak's "good faith state of mind" by testifying on the market of mortgage-backed securities was not permitted by the judge, the report said.
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