Jesse Litvak, a former managing director with Jefferies & Co. was found guilty by a federal jury of all counts – including securities fraud and making false statements. According to Bloomberg News, the banker was also guilty of fraud connected to the U.S. government’s Troubled Asset Relief Program following a trial before U.S. District Judge Janet C. Hall in New Haven, Connecticut. The Troubled Asset Relief Program or TARP is a program of the United States government to purchase assets and equity from financial institutions to strengthen its financial sector that was signed into law by U.S. President George W. Bush on October 3, 2008. It was a component of the government’s measures in 2008 to address the subprime mortgage crisis. The TARP program originally authorized expenditures of $700 billion.
Located in New York, Jefferies LLC is an American global investment bank and institutional securities firm. Jefferies was named one of the World’s Most Admired Companies by Fortune magazine in 2011.
39 year old Jesse Litvak has been reported to be the only person to have been charged with fraud in relation to the Public-Private Investment Program. A Connecticut jury found Litvak guilty of a scheme to defraud customers on residential mortgage-backed securities trades. ABC News reported that Jesse Litvak was found guilty on one count of TARP fraud, guilty of 10 counts of securities fraud, and according to Law 360, four counts of making false statements to the federal government. Jesse Litvak was the first person convicted of a crime related to a program that used bailout funds in the financial meltdown to restart trading markets for mortgage-backed securities.
Authorities also reported that Jesse Litvak sold bonds after inventing a fictitious third-party seller, allowing him to charge the buyer an extra commission that Jefferies was not entitled to because it was selling bonds it held in its own inventory. This conviction may further the government’s efforts to prosecute other traders and banks related to the 2008 financial crisis.
Eric Glover, Assistant U.S. Attorney reported that “We’re gratified the jury delivered the verdict that it did and justice was served.” U.S. Attorney Deirdre Daly said that, “Today’s verdict shows plainly and powerfully that Wall Street professionals are not above the law.”
Jesse Litvak is scheduled to be sentenced on May 30. Patrick Smith, attorney for Jesse Litvak stated that, “Mr. Litvak is obviously very disappointed in the verdict,” and that according to Bloomberg News, “We plan to appeal. We think the court made several serious errors that undermined Mr. Litvak’s ability to present his full defense.”
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