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Former broker-dealer facing fraud charges over bailout funds

For some companies, funds that were received from the government bailout during the financial crisis were used to buy bonds. Jefferies & Co. was one of those companies, and one of their former broker-dealers is now facing securities fraud charges related to those funds. Prosecutors in the case are pushing forward with the fraud claim, but one man claims that he simply told small lies that do not amount to such serious charges.

The former broker-dealer once worked on the trading floor in Connecticut. Supposedly, the man was not always honest about the price of bonds purchased with bailout money and wrongly inflated the price to customers on a regular basis. Authorities say that he pocketed the money that customers overpaid. He apparently also wrongly informed some customers that the bonds were actually being sold by a third party in order to collect a larger commission than he could have otherwise.

The man claims that any excess profit that he earned was not kept by him and instead went straight to the company. Additionally, he states that he was not committing fraud but rather engaging in simple lies that were not intended to cause any harm. All in all, he says that he was just a savvy broker-dealer.

His fraud charges related to this Connecticut company's bailout funds include both Troubled Asset Relief Program fraud as well as making false statements. If convicted on all counts, he could potentially face a maximum sentence of 230 years in prison. While the charges he faces are serious, it is likely that his defense will continue to argue that the former broker-dealer did not fraud anyone by employing small white lies in order to obtain business for himself and the company that he worked for.

Source:, Trial starts for Conn. trader charged with fraud, No author, Feb. 18, 2014

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