For bond trader Jesse Litvak, the past five years have been a whirlwind of court cases and even jail time for his role in the financial crisis.
Now, however, the federal government announced it is dropping its case against Litvak after two different convictions of fraud were overturned in the federal appeals court.
Litvak was originally charged in 2013 with 16 counts of defrauding customers on residential mortgage-backed securities trades by allegedly misrepresenting both the selling price and buying price of mortgage bonds.
Litvak’s charge sent alarm bells through Wall Street as bond traders realized they could also face criminal prosecution for their actions leading up to the housing crisis.
In March 2014, Litvak was found guilty of lying to clients about mortgage-backed securities and received a two-year prison sentence for 10 counts of securities fraud, one count of defrauding TARP, and four counts of making false statements within the jurisdiction of the United States government.
Litvak successfully fought that sentence, with the Court of Appeals for the Second Circuit tossing his conviction because he wasn’t allowed to bring expert witnesses to testify on his behalf.
Last year, Litvak was sentenced to two years in jail for that one count and sent to jail, but Litvak also appealed that decision, and for the second time, the Court of Appeals overturned his conviction.
The court ordered that Litvak be released on appropriate bond pending further proceedings. Now, the feds are officially dropping its case.
While a judge must still grant the dismissal request, this is only a formality. After five years of litigation, Litvak, one of the few who was jailed for his role in the housing crisis, is now free.