FBI
arrests former Bear Stearns fund managers Ralph Cioffi and Matthew
Tannin
Times
Photo
Cioffi
and Tannin were led in handcuffs from their
homes respectively in Tenafly, New Jersey,
and Manhattan, processed in the FBI's New York
office and taken across the East River to a
Brooklyn federal court.
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Cioffi and Tannin
charged with Securities Fraud
Mortgage Investment Schemes losing $1.6 billon
Tom
Bawden
The
Times
June
20, 2008
FBI
agents arrested two former Bear Stearns hedge fund
managers at their homes yesterday, the first Wall
Street executives to be formally charged by the US
Government in relation to the credit crunch.
Within
hours of arresting Ralph Cioffi and Matthew Tannin,
the Justice Department announced that it had charged
more than 400 people, including 50 in the previous
two days, in a three-month sting operation relating
to cases of mortgage fraud that have collectively
cost the victims an estimated $1 billion (£507
million).
Each
faces nine counts of conspiracy, securities fraud
and wire fraud for allegedly misleading investors
over the true health of two Bear Stearns hedge funds
they managed.
The
funds collapsed last summer under the weight of loss-making
sub-prime mortgage investments, losing about $1.6 billion
of their investors' money.
Both
developments are part of a broader federal government
investigation as the authorities respond to sustained
public pressure for convictions.
The
Bear Stearns charges represent the first big case
against Wall Street, while the other arrests concern
those players in the housing industry, such as mortgage
lenders and estate agents, who have exploited the
housing bubble.
Prosecutors
allege that the two Bear Stearns executives believed
that the funds were in a grave condition and at risk
of collapse as early as March last year but failed
to communicate that to investors, according to the
indictment.
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