1
00:00:00,120 --> 00:00:03,519
Speaker 1: After four years and two trials, former Jeffreys trader Jesse

2
00:00:03,680 --> 00:00:07,040
Speaker 1: Litvak has been sentenced to two years in prison again.

3
00:00:07,640 --> 00:00:10,799
Speaker 1: Litvak was convicted of lying to customers about the prices

4
00:00:10,840 --> 00:00:14,000
Speaker 1: of mortgage backed bonds and sentenced to two years in prison.

5
00:00:14,000 --> 00:00:19,160
Speaker 1: In that conviction was reversed, but Litvak was convicted again

6
00:00:19,280 --> 00:00:22,400
Speaker 1: and given the same sentence, although the judge up the

7
00:00:22,480 --> 00:00:25,919
Speaker 1: fine to two million dollars from one point seventy five

8
00:00:26,000 --> 00:00:29,960
Speaker 1: million the first time. His attorney compared Litvak's tactics to

9
00:00:30,000 --> 00:00:33,080
Speaker 1: the puffery of a used car salesman. But a chat

10
00:00:33,120 --> 00:00:36,400
Speaker 1: transcript that Litvak edited to make it look like one

11
00:00:36,440 --> 00:00:40,159
Speaker 1: customer had paid more for bonds was hard to explain away.

12
00:00:40,479 --> 00:00:43,599
Speaker 1: Our guest is David Bissinger, a partner at Bissinger, Oshman

13
00:00:43,720 --> 00:00:48,320
Speaker 1: and Williams Dave. The second trial, Litvak was found guilty

14
00:00:48,400 --> 00:00:52,280
Speaker 1: of one count of securities fraud. First trial convicted of

15
00:00:52,360 --> 00:00:55,960
Speaker 1: fifteen counts of securities fraud. Yet his sentence was the

16
00:00:56,080 --> 00:00:58,520
Speaker 1: same and his fine was a quarter of a million

17
00:00:58,600 --> 00:01:03,160
Speaker 1: dollars higher. The sec in time, why uh, June, there's

18
00:01:03,360 --> 00:01:07,000
Speaker 1: uh about five or six reasons that the government gave

19
00:01:07,200 --> 00:01:11,039
Speaker 1: and that the judge in Connecticut appeared to agree with UH.

20
00:01:11,240 --> 00:01:14,520
Speaker 1: First UH a lack of remorse. There were texts that

21
00:01:14,600 --> 00:01:19,039
Speaker 1: were discovered by Mr Litvac in which he blamed his

22
00:01:19,160 --> 00:01:25,200
Speaker 1: alleged victims. He criticized jurors as as being less than intelligent. Um.

23
00:01:25,280 --> 00:01:29,280
Speaker 1: He uh then moved to Florida, you know, established himself

24
00:01:29,280 --> 00:01:31,720
Speaker 1: and what most folks would consider to be a pretty

25
00:01:31,760 --> 00:01:38,480
Speaker 1: palatial environment and just in general appeared to show a

26
00:01:38,520 --> 00:01:42,240
Speaker 1: certain degree of arrogance that the court uh seemed to

27
00:01:42,920 --> 00:01:48,560
Speaker 1: agree with the government and its brief UH warranted a

28
00:01:48,560 --> 00:01:52,040
Speaker 1: an upward or a greater amount of sentencing, even though,

29
00:01:52,160 --> 00:01:55,040
Speaker 1: like you say, the charge, Uh, the single conviction was

30
00:01:55,440 --> 00:01:58,440
Speaker 1: far uh you know, less of a victory on the

31
00:01:58,720 --> 00:02:02,720
Speaker 1: technical merits. And in the first trial, Dave, what what

32
00:02:02,920 --> 00:02:05,720
Speaker 1: sort of a message do you think comes out of

33
00:02:05,720 --> 00:02:09,480
Speaker 1: this this conviction, in this sentence? I mean it, you know,

34
00:02:09,520 --> 00:02:12,200
Speaker 1: the much of the discussion during the trial was about

35
00:02:12,200 --> 00:02:15,919
Speaker 1: whether this was a commonplace practice, what that he engaged

36
00:02:15,960 --> 00:02:20,200
Speaker 1: in the puffery. Do you think other folks on Wall

37
00:02:20,240 --> 00:02:24,639
Speaker 1: Street are are looking at us in and changing their conduct. Yeah,

38
00:02:24,680 --> 00:02:26,680
Speaker 1: it's I think it's pretty clear that the firms are

39
00:02:26,680 --> 00:02:30,239
Speaker 1: looking at it very seriously in terms of their compliance policies,

40
00:02:30,480 --> 00:02:34,079
Speaker 1: the way they manage their people. Um, and I think

41
00:02:34,080 --> 00:02:38,040
Speaker 1: the counterparties, for example, the insurance companies and pension funds

42
00:02:38,040 --> 00:02:40,639
Speaker 1: and so forth that depend on uh, the Jesse lit

43
00:02:40,639 --> 00:02:44,720
Speaker 1: Backs of the world are looking at the brokers with

44
00:02:45,000 --> 00:02:47,600
Speaker 1: you know, a more of a jaundiced eye. But I

45
00:02:47,600 --> 00:02:50,880
Speaker 1: think it's a mixed bag because there was enough evidence

46
00:02:50,919 --> 00:02:53,200
Speaker 1: that lit Back and his lawyers presented at the trial

47
00:02:53,280 --> 00:02:55,920
Speaker 1: that you know, some of these same victims, you know,

48
00:02:55,960 --> 00:02:58,760
Speaker 1: made misrepresentations of their own and that some of these

49
00:02:58,760 --> 00:03:02,880
Speaker 1: same victims or where that Litfac was exaggerating, or at

50
00:03:02,960 --> 00:03:05,799
Speaker 1: least that it was common for people like LITFAC to exaggerate.

51
00:03:06,160 --> 00:03:10,120
Speaker 1: I think it's really difficult to measure any deterrent effect,

52
00:03:10,200 --> 00:03:12,280
Speaker 1: but I think in this case, maybe it's as much

53
00:03:12,280 --> 00:03:15,359
Speaker 1: of a reaction to these particular facts by this court

54
00:03:15,400 --> 00:03:18,720
Speaker 1: than it is any sort of measured or or you know,

55
00:03:18,880 --> 00:03:24,440
Speaker 1: cert of statistically balanced deterrence analysis. Dave, there are some

56
00:03:24,480 --> 00:03:28,359
Speaker 1: more trials coming up of this nature. But lit FAC

57
00:03:28,560 --> 00:03:33,320
Speaker 1: started this crackdown on shady sales tactics in this opaque

58
00:03:33,360 --> 00:03:37,520
Speaker 1: world of securities backed by assets such as home loans,

59
00:03:38,280 --> 00:03:42,760
Speaker 1: why were they able to escape any kind of investigations

60
00:03:42,880 --> 00:03:46,960
Speaker 1: before this. Well, I think that a couple of things

61
00:03:47,000 --> 00:03:50,840
Speaker 1: that drove the lit Fac prosecution First was Mr Litfac

62
00:03:50,920 --> 00:03:54,040
Speaker 1: in the evidence itself, it was I think more egregious

63
00:03:54,120 --> 00:03:56,440
Speaker 1: perhaps than in a lot of the other cases. A

64
00:03:56,560 --> 00:03:59,960
Speaker 1: second driver that at least permeates in the government's brief

65
00:04:00,080 --> 00:04:03,160
Speaker 1: thing is the fact that what instruments Mr Litfack was

66
00:04:03,200 --> 00:04:07,240
Speaker 1: trading in we're really a product of TARP. In other words,

67
00:04:07,520 --> 00:04:10,600
Speaker 1: the government bailout basically made all of this possible. And

68
00:04:10,640 --> 00:04:13,000
Speaker 1: I think in the eyes of the Justice Department and

69
00:04:13,040 --> 00:04:16,839
Speaker 1: then either the jurors and ultimately the court sensing Mr

70
00:04:16,880 --> 00:04:21,400
Speaker 1: Litfac again, I think is a subjective matter in terms

71
00:04:21,400 --> 00:04:24,680
Speaker 1: of weighing the equities, UH, that did not help Mr

72
00:04:24,760 --> 00:04:28,280
Speaker 1: Litfax cause whereas if Mr Litfack we're dealing with purely

73
00:04:28,320 --> 00:04:32,680
Speaker 1: private parties and instruments that were purely you know, privately created,

74
00:04:33,279 --> 00:04:37,120
Speaker 1: um it, I don't think had the same uh sort

75
00:04:37,120 --> 00:04:41,599
Speaker 1: of upsetting or offensive quality that the government was able

76
00:04:41,640 --> 00:04:43,240
Speaker 1: to give it, you know, with the sort of bailout

77
00:04:43,279 --> 00:04:46,800
Speaker 1: money part money UH generated bonds that we had in

78
00:04:46,800 --> 00:04:51,440
Speaker 1: this case. In about twenty seconds here Dave do you

79
00:04:51,760 --> 00:04:55,839
Speaker 1: do you believe that it's fair to use a person's

80
00:04:55,880 --> 00:05:02,800
Speaker 1: conduct in between trials against them at a center sing Well, yeah,

81
00:05:02,920 --> 00:05:06,320
Speaker 1: in a way, June, I think it is somewhat unfair,

82
00:05:06,360 --> 00:05:08,640
Speaker 1: but I don't think that that's going to change. First

83
00:05:08,680 --> 00:05:12,400
Speaker 1: of all, Mr Littack became a quasi public figure. Uh. Second,

84
00:05:12,400 --> 00:05:15,400
Speaker 1: the government does have the power to continue to subpoena

85
00:05:15,520 --> 00:05:18,960
Speaker 1: him and get records. So is a practical matter. I

86
00:05:18,960 --> 00:05:22,159
Speaker 1: think anyone in his shoes ought to have had a

87
00:05:22,160 --> 00:05:25,719
Speaker 1: little more uh caution. I mean, even his own counsel,

88
00:05:25,760 --> 00:05:27,840
Speaker 1: and the briefing kind of acknowledged. I think at one

89
00:05:27,839 --> 00:05:31,640
Speaker 1: point they acknowledged that his comments about jurors and stuff

90
00:05:31,839 --> 00:05:35,400
Speaker 1: were flippant. Well, we'll let you go with that, Dave,

91
00:05:35,960 --> 00:05:38,520
Speaker 1: and it's a pleasure to have you back on Bloomberg Law.

92
00:05:38,560 --> 00:05:41,640
Speaker 1: That's Dave Bissinger, partner at Bissinger, Oshman and Williams