RMBS trader indicted for TARP fraud
A 16-count indictment has been delivered against 38-year old Jesse Litvak for allegedly defrauding customers on residential mortgage-backed securities trades.
The indictment is the result of an investigation by Christy Romero, Special Inspector General for the Troubled Asset Relief Program and U.S. Attorney David Fein out of Connecticut.
Litvak is being charged with securities fraud for allegedly using his role as managing director and registered broker-dealer at Jefferies & Co. to defraud RMBS customers, SIGTARP alleges. Some of Litvak's alleged victims included investment funds — six of which the Department of Treasury set up in 2009 to keep the RMBS market stable during the financial crisis.
"The charges paint a picture of Litvak shamelessly lying to dupe the government into overpaying for mortgage securities with bailout funds," said Special Inspector General for TARP Christy Romero.
The charges relate to the Legacy Securities Public-Private Investment Program launched by the Treasury in 2009 using $22 billion in TARP bailout money to restart RMBS trading.
Litvak is accused of misrepresenting in some cases the RMBS seller's asking price to the buyer and, in other cases, misrepresenting the buyer's price to the sellers.
Litvak is accused of defrauding six PPIP funds and private investment funds out of more than $2 million. He also is facing 11 counts of securities fraud—each of which carries a maximum term of 20 years in prison for each count.
In addition, the one count of TARP fraud carries a maximum term of 10 years, while the four counts of making false statements to the government carry maximum terms of five years per count, SIGTARP alleges.