Former employees of Credit Suisse Securities LLC are accused of conspiracy, securities fraud, and wire fraud. Their names are Julian Tzolov and Eric Butler. They basically are connected with a scheme in which they sold “mortgage-backed collateralized debt obligations” saying they were backed by something other than what they were really backed up by.
Both Tzolov and Butler are allegedly said to have falsified their sales commissions by selling “ARS” which they said were backed by mortgages to the company, but they bought ARS which were backed by student loans. They covered up their misdealing by lying about the names of the ARS clients bought.
This was misleading to the clients. Basically, the clients thought they had purchased ARS which were backed by student loans, but in reality they were backed by mortgage loans, and when the mortgage backed ARS market failed, according to the report from the U.S. Department of Justice (New York), the clients lost all of their investments.
Many crimes were committed with these dealing. Butler was due to be arraigned on September 3rd of 2008 before the United States Magistrate at the United States Courthouse in Brooklyn, New York.
As documented by the indictment, both were brokers who ran “Credit Suisse’s Corporate Cash Management Group,” which is a branch of the company that helped their clients manage excess corporate cash holdings. Beginning in 2004, the pair went to various companies that had banking relationships already with Credit Suisse to get them to invest cash in ARS backed by student loans, but remember they were backed by mortgage loans. They were backed by FFELP by the U.S. Dept. of Education. Unfortunately, these are the loans that we all use for our education throughout the entire country, so stealing from the Department of Education is stealing from students.
The defendants told their clients they were very low risk investments. Naturally, people who are told something is a low risk with a big...