Cioffi and Tannin, Bear Stearns Dynamic Duo led away in handcuffs by the FBI, charged with criminal offences ...après nous, le déluge
A September 2007 Business Week report said that at a London conference in February, 2006, Matthew Tannin, a senior managing director at Bear Stearns, told investors that...
"... buying into one of the hedge funds he was hawking, the Bear Stearns High-Grade Structured Credit Strategies Fund, was akin to putting money in an ordinary bank account"
The Feds.the Department of Justice and the Securities and Exchange Commission made two major and very public moves today to crackdown, swiftly and very visibly, to demonstrate that wrongdoers in the mortgage meltdown can expect to be handled with ruthless efficiency.
The Bear Stearns Dynamic Duo, Ralph R. Cioffi, 52, and Matthew Tannin, 46, who just 18 months ago enjoyed their status (and 6 figure rewards) as top hedge managers in a firm at the vanguard of the residential mortgage backed seciritisation boom , were arrested at their homes early today. Cioffi at his family home in Tenafly, New Jersey, and and Tannin in his Manhattan duplex by agents of the Federal Bureau of Investigation .They were later indicted for mail fraud and conspiracy to commit securities fraud this morning by agents of the Federal Bureau of Investigation .
The two men were charged with misleading investors about the health of two Bear Stearns hedge funds whose collapse last year ignited the subprime mortgage crisis. Cioffi was also charged with insider trading. The Securities and Exchange Commission sued the men today, claiming they duped investors before the funds imploded.
If convicted of conspiracy to commit securities fraud, wire fraud or mail fraud, the defendants face as long as 30 years in prison. The case is U.S. v. Cioffi, U.S. District Court for the Eastern District of New York (Brooklyn) about which we are going to hear a great deal more in the coming months.
Cioffi managed the two funds that collapsed, and Tannin served as his chief operating officer. The hedge funds invested virtually all their assets in subprime-mortgage-related securities. Their investment bets failed last June when prices for collateralized-debt obligations - CDOs, linked to residential mortgage loans plummeted , as they turned sour amidst rising late payments by and defaults by borrowers with poor credit histories or heavy debt.
U.S. prosecutors are focusing on an e-mail allegedly sent by the two suggesting that their funds were headed for trouble, four days before they told investors they were comfortable with their holdings, the Wall Street Journal reported today, citing people familiar with the situation.
Today, both men walked out of FBI headquarters in lower Manhattan looking straight ahead with their hands cuffed behind their backs. Cioffi, wearing a blue blazer, tan slacks and no tie, and Tannin, wearing a blue suit and tie, were led into separate vehicles.
In another move today, two government officials said more than 400 people have been charged in a U.S. Justice Department mortgage-fraud sweep.
Called Operation Malicious Mortgage, the arrests are to be announced this afternoon by FBI Director Robert Mueller and Deputy Attorney General Mark Filip at the Justice Department in Washington. A number of arrests were made earlier this week.
The Department of Justice (DOJ) said it was pursuing 144 cases against the 406 defendants.
The DOJ estimates that total losses to homeowners and borrowers from the identified mortgage frauds in this sweep amounted to about US$1bn (£500m).
"Mortgage fraud and related securities fraud pose a significant threat to our economy, to the stability of our nation's housing market and to the peace of mind to millions of Americans," Mark Filip, Deputy US Attorney General is reported saying. Filip was a Federal judge in Chicago and selected by Ed Mukasey to take over effectively from the position of Gonzalez's no 2 Paul McNulty who resigned last summer. He has an impressive pedigree, there will be a lot of cell doors slamming shut this summer.
Cases involve false employment records and inflation of property values.
As nanny used to say..."There'll be tears before bedtime"
For those who missed it, start at the bottom ....
Tuesday, June 17, 2008 Bear Stearns : the gig is up , Bank Robbers to be charged this week
Tuesday, June 03, 2008 Bradford and Bingley catch cold, Wall Street gets pneumonia : S&P cans Big US Banks ratings - shares slide
Tuesday, April 01, 2008 Lehman Bros 17/3 - " Our liquidity position has been and continues to be very strong,'' Offers US$3 Bn. Convertible stock 7.25% coupon / 33% discount
Monday, March 31, 2008 German Financial regulator BaFin estimates global shakedown of US$600 Bn of which German share is 10%
Ludwig von Mises summed it up like this:"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The question is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
Friday, March 28, 2008 The Banker's Money Pit swallows helicopter funds at an increasing and alarming rate. When do the Fed and the BOE run out of paper and printing ink ?
Monday, 17th March 2008 Bear Stearns basket case goes to J P Morgan for US$2 a share - share prices shrinking faster than Glaciers - Nightmare on Wall Street Part : 13
Friday , 4th March 2008 Bear Stearns shares crash 42% - Joe Lewis has lost US$600 Mn.
Friday, December 21, 2007 Bank robbers don't carry guns and wear masks these days
October 15th 2007 - You Tube- John Bird and John Fortune
Saturday, September 01, 2007 Bear Stearns - serial NY Bankruptcy Court appearances - fugitive UK citizen in the dock in Vienna - white collar crime - banking Caribbean style (Cioffi first fingered)