April 26 A federal judge in Connecticut on
Wednesday is set to sentence a former Jefferies Group bond
trader after he was found guilty earlier this year of defrauding
customers on bond prices.
A jury in January found Jesse Litvak guilty of one of 10
criminal charges he had faced, a muted victory as prosecutors
try to crack down on nefarious sales practices on Wall Street.
The verdict became the second time that Litvak was found
guilty of fraud. He was first tried and convicted in 2014 and
sentenced to two years in prison, but that verdict and sentence
were overturned on appeal.
Federal prosecutors are now asking Chief Judge Janet Hall to
sentence Litvak to nine to 11 years in prison, while his defense
attorneys are seeking eight months of house arrest at his home
in Boca Raton, Florida. Litvak had worked in the Stamford,
Connecticut, office of Jefferies, a unit of Leucadia National
Prosecutors argued that a stiff sentence, even tougher than
the one handed down for the previous conviction on all 10
counts, was needed as a deterrent to illegal tactics in the
financial services industry.
"A prison sentence for such conduct can serve as a powerful
deterrent against the commission of financial fraud, in
particular, by other broker-dealers like Litvak," prosecutors
said in court papers ahead of Wednesday's hearing. "As this case
shows, there can be a huge personal financial incentive for
broker-dealers to commit fraud on their customers."
Litvak's attorneys argued that prosecutors were overreaching
in seeking such a long sentence.
"The government is attempting to compensate for its mostly
unsuccessful prosecution of Mr. Litvak by urging sharp
sentencing enhancements based on acquitted and uncharged
conduct," they wrote.
Litvak, who had been a managing director at Jefferies, was
accused of generating $2.25 million of illegal profit by
misleading customers including AllianceBernstein and Soros Fund
Management about bond prices from 2009 to 2011.
Prosecutors said Litvak was motivated by greed, and that his
"lies" caused customers to overpay for bonds they bought and
accept lower prices for bonds they sold.
But defense lawyers said Litvak's customers were
sophisticated, with a deep well of talent and resources, and
would be skeptical if prices that Litvak quoted looked wrong.
(Writing by Scott Malone; Editing by Bernard Orr)