Federal Prosecutors Bungle Case Against Bear Stearns Fund Managers
In an absolutely stunning display of prosecutorial incompetence, federal prosecutors managed to present a case against Bear Stearns’ hedge fund managers, Ralph Cioffi and Matthew Tannin that was so weak that not only were they acquitted by the jury in six hours of deliberation, but according to Bloomberg, one of the jurors said after the trial was over that she’d invest with them if she had the money.
Cioffi and Tannin had been led away in handcuffs in June of 2008, accused of lying to and defrauding investors about the condition of their funds, which consisted of heavily leveraged mortgage-backed securities, as they were imploding. Prosecutors focused on the pair’s emails that showed that they knew things were very bad, while they told investors things were very good.
Investors lost $1.6 billion as a result of what Cioffi and Tannin created and then destroyed, and federal prosecutors had referred to the case as “a clear case of Wall Street fraud,” and “a chance to bring to account two culprits of the sub-prime age”.
So, absolutely cracker jack work there, fellas. The SEC says it will proceed with its civil suit against the two, so perhaps they’ll win a judgement they can wallpaper their walls with, or perhaps recover some miniscule percentage of the money investors lost. I guess it’s better than nothing, but does make one want to say “Oh, who cares”.
Of course, when you stop to consider the pain, both financial and otherwise, that these two and too many others like them caused in this country, it’s hard to stomach their acquittal.
I suppose the only consolation is that the Justice Department still have something like 570 investigations against financial types open, so maybe next time the outcome will be different… I certainly hope so.
Regardless, it’s hard to imagine that you can cost investors $1.6 billion, get caught with a paper and email trail that shows that you knew what you were doing as you lied your ass off along the way, and then go home, watch a little T.V. and have a beer. Is this a great country or what?
If you didn’t read my coverage of Cioffi and Tannin, you can find it here in Part 1:
And here in Part 2: