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Banker Claims Law Firm Exec Was Not Included in Securities Fraud

Thu 09 Mar, 2017  /  by McIntyre & Lemon  /   Client Alerts

03/09/17 – Law360 reports that a bank executive said that a New York-based law firm’s former executive director never shared financial information with the bank executive to attract investors to the firm’s $150 million bond offering.

According to Law360, the bank executive showed jurors emails from 2010 between the bank executive and the firm’s staff in preparation for the firm’s private securities offering. The executive confirmed that the emails did not involve the firm’s executive director, and that the bank executive generally had not had much contact with firm executive director.

Prosecutors claim investors in the private placement were defrauded as a result of sinking money into the firm based on misleading financial information intended to make the law firm appear healthier than it actually was in the years immediately following the 2007 global financial crisis. The defendants are accused of masterminding an accounting scheme to deceive the firm’s lenders and investors in order to maintain financing for the firm.

The bank acted as agent for the 2010 bond offering, which was pitched to the bank’s roster of insurer-investors who make up the market for those types of private placements.

Although a 2015 trial for the defendants eventually resulted in several charges being dismissed, the defendant and another co-defendant still face charges of scheme to defraud, securities fraud and conspiracy.