Speaker 1: After four years and two trials, former Jeffreys trader Jesse
Speaker 1: Litvak has been sentenced to two years in prison again.
Speaker 1: Litvak was convicted of lying to customers about the prices
Speaker 1: of mortgage backed bonds and sentenced to two years in prison.
Speaker 1: In that conviction was reversed, but Litvak was convicted again
Speaker 1: and given the same sentence, although the judge up the
Speaker 1: fine to two million dollars from one point seventy five
Speaker 1: million the first time. His attorney compared Litvak's tactics to
Speaker 1: the puffery of a used car salesman. But a chat
Speaker 1: transcript that Litvak edited to make it look like one
Speaker 1: customer had paid more for bonds was hard to explain away.
Speaker 1: Our guest is David Bissinger, a partner at Bissinger, Oshman
Speaker 1: and Williams Dave. The second trial, Litvak was found guilty
Speaker 1: of one count of securities fraud. First trial convicted of
Speaker 1: fifteen counts of securities fraud. Yet his sentence was the
Speaker 1: same and his fine was a quarter of a million
Speaker 1: dollars higher. The sec in time, why uh, June, there's
Speaker 1: uh about five or six reasons that the government gave
Speaker 1: and that the judge in Connecticut appeared to agree with UH.
Speaker 1: First UH a lack of remorse. There were texts that
Speaker 1: were discovered by Mr Litvac in which he blamed his
Speaker 1: alleged victims. He criticized jurors as as being less than intelligent. Um.
Speaker 1: He uh then moved to Florida, you know, established himself
Speaker 1: and what most folks would consider to be a pretty
Speaker 1: palatial environment and just in general appeared to show a
Speaker 1: certain degree of arrogance that the court uh seemed to
Speaker 1: agree with the government and its brief UH warranted a
Speaker 1: an upward or a greater amount of sentencing, even though,
Speaker 1: like you say, the charge, Uh, the single conviction was
Speaker 1: far uh you know, less of a victory on the
Speaker 1: technical merits. And in the first trial, Dave, what what
Speaker 1: sort of a message do you think comes out of
Speaker 1: this this conviction, in this sentence? I mean it, you know,
Speaker 1: the much of the discussion during the trial was about
Speaker 1: whether this was a commonplace practice, what that he engaged
Speaker 1: in the puffery. Do you think other folks on Wall
Speaker 1: Street are are looking at us in and changing their conduct. Yeah,
Speaker 1: it's I think it's pretty clear that the firms are
Speaker 1: looking at it very seriously in terms of their compliance policies,
Speaker 1: the way they manage their people. Um, and I think
Speaker 1: the counterparties, for example, the insurance companies and pension funds
Speaker 1: and so forth that depend on uh, the Jesse lit
Speaker 1: Backs of the world are looking at the brokers with
Speaker 1: you know, a more of a jaundiced eye. But I
Speaker 1: think it's a mixed bag because there was enough evidence
Speaker 1: that lit Back and his lawyers presented at the trial
Speaker 1: that you know, some of these same victims, you know,
Speaker 1: made misrepresentations of their own and that some of these
Speaker 1: same victims or where that Litfac was exaggerating, or at
Speaker 1: least that it was common for people like LITFAC to exaggerate.
Speaker 1: I think it's really difficult to measure any deterrent effect,
Speaker 1: but I think in this case, maybe it's as much
Speaker 1: of a reaction to these particular facts by this court
Speaker 1: than it is any sort of measured or or you know,
Speaker 1: cert of statistically balanced deterrence analysis. Dave, there are some
Speaker 1: more trials coming up of this nature. But lit FAC
Speaker 1: started this crackdown on shady sales tactics in this opaque
Speaker 1: world of securities backed by assets such as home loans,
Speaker 1: why were they able to escape any kind of investigations
Speaker 1: before this. Well, I think that a couple of things
Speaker 1: that drove the lit Fac prosecution First was Mr Litfac
Speaker 1: in the evidence itself, it was I think more egregious
Speaker 1: perhaps than in a lot of the other cases. A
Speaker 1: second driver that at least permeates in the government's brief
Speaker 1: thing is the fact that what instruments Mr Litfack was
Speaker 1: trading in we're really a product of TARP. In other words,
Speaker 1: the government bailout basically made all of this possible. And
Speaker 1: I think in the eyes of the Justice Department and
Speaker 1: then either the jurors and ultimately the court sensing Mr
Speaker 1: Litfac again, I think is a subjective matter in terms
Speaker 1: of weighing the equities, UH, that did not help Mr
Speaker 1: Litfax cause whereas if Mr Litfack we're dealing with purely
Speaker 1: private parties and instruments that were purely you know, privately created,
Speaker 1: um it, I don't think had the same uh sort
Speaker 1: of upsetting or offensive quality that the government was able
Speaker 1: to give it, you know, with the sort of bailout
Speaker 1: money part money UH generated bonds that we had in
Speaker 1: this case. In about twenty seconds here Dave do you
Speaker 1: do you believe that it's fair to use a person's
Speaker 1: conduct in between trials against them at a center sing Well, yeah,
Speaker 1: in a way, June, I think it is somewhat unfair,
Speaker 1: but I don't think that that's going to change. First
Speaker 1: of all, Mr Littack became a quasi public figure. Uh. Second,
Speaker 1: the government does have the power to continue to subpoena
Speaker 1: him and get records. So is a practical matter. I
Speaker 1: think anyone in his shoes ought to have had a
Speaker 1: little more uh caution. I mean, even his own counsel,
Speaker 1: and the briefing kind of acknowledged. I think at one
Speaker 1: point they acknowledged that his comments about jurors and stuff
Speaker 1: were flippant. Well, we'll let you go with that, Dave,
Speaker 1: and it's a pleasure to have you back on Bloomberg Law.
Speaker 1: That's Dave Bissinger, partner at Bissinger, Oshman and Williams