On Wednesday, Kareem Serageldin, former global head of structure credit trading for Credit Suisse Group AG, was apprehended by law enforcement in London and now faces extradition to the United States. Kareem was arrested on charges of fraud committed in U.S. in relation to subprime mortgage bonds worth at least $3 billion. The arrest of Kareem marks a win for U.S. prosecutors who won convictions against two of Kareem’s former colleagues earlier this year, but had been waiting nearly eight months for Kareem to return to the country.
A spokesman for London’s Metropolitan Police said the extradition proceedings would commence immediately on Thursday.
Kareem Serageldin is supposed to be the most senior banker so far charged in the scandal dating back to 2007, in which traders of mortgage-backed securities tried to hide $540 million in losses on their books, but were caught by the authorities.
In February this year, two other colleagues of Kareem pleaded guilty to criminal charges of conspiracy to commit wire fraud. They also admitted in a U.S. federal court to falsifying books and records, making it the first U.S. prosecution success in nabbing employees of a major bank involved in the subprime mess of 2007-08.
One of Kareem’s colleagues, David Higgs, who cooperated with investigators admitted that he had “manipulated and inflated” values in books for a portfolio of mortgage bonds. He alleged that Kareem had instructed him to hide the actual losses and show profits on record. The team’s bonuses depended upon meeting the profit targets.
Though Kareem was charged on the same counts as the two who pled guilty – at the time of filing of the case Kareem was in London, and then he forgot to return home, until apprehended on Wednesday.