Dude, where's my bank?!! (Bear Stearns DEAD at 85)

[IbnMardhiyah]

This. is just. pathetic.

(Cioffi and Tannin are the two managers who really screwed up one of their hedge funds, precipitating a major run on Bear right before the collapse)

Hong said Cioffi and Tannin’s funds failed because of the lenders who stopped extending credit. “At the end of the day, when the lenders said they were backing out, they had no choice,” she said.

This is the kind of juror you wanna just give so much mad cut-eye that they'll shrivel up and die. I wish they actually chose jurors who knew what the hell they they were talking about.

Bear Jury Says U.S. Flopped; Want to Invest With Cioffi, Tannin
By Patricia Hurtado and Thom Weidlich

Nov. 10 (Bloomberg) -- Prosecutors missed the mark so widely in the fraud trial of Bear Stearns Cos. hedge fund managers Ralph Cioffi and Matthew Tannin that a juror said after their acquittal she would invest with them if she had the money.

The panel of eight women and four men who spent the past month hearing testimony in the case took only nine hours to find them not guilty on all six counts. During interviews after the verdict today, several jurors said the government failed to prove they defrauded investors who lost $1.6 billion in the two hedge funds run by the men -- both of which were mostly made up of subprime mortgage-backed securities.

The funds collapsed in 2007, as did Bear Stearns itself less than a year later. The defendants, according to juror Seraphaine Stimpson, were made “scapegoats for Wall Street.”

Cioffi, 53, the portfolio manager for the two funds, and Tannin, 48, their chief operating officer, went on trial Oct. 13 in federal court in Brooklyn, New York, on charges of conspiracy, securities and wire fraud. Each faced as many as 20 years in prison if convicted.

Their two funds failed when prices for collateralized debt obligations linked to home loans fell amid rising late payments by borrowers with poor credit or heavy debt. Bear Stearns was purchased the next year by JPMorgan Chase & Co. The government alleged Cioffi and Tannin continued to seek investors in their funds after they learned they were financially unsound.

Stimpson said she came into the trial thinking both Cioffi and Tannin were guilty of the fraud, insider-trading and conspiracy charges. She said she began to have second thoughts as the testimony progressed and defense lawyers “tore the government witnesses apart.”

‘Weren’t 100 Percent’
“We just weren’t 100 percent convinced,” said Stimpson, 27, an office coordinator at Brooklyn College. “As the witnesses began to testify, I had my doubts.” Key parts of the government’s case relied on e-mails written by the defendants.

The men claimed in e-mails and conversations with investors to be adding their own money to the funds in the months before their collapse, the U.S. said. Neither man added any money to the funds, once valued at $20 billion, prosecutors alleged.

The defense argued Cioffi and Tannin were innocent of any wrongdoing and had remained honestly optimistic about the funds’ health. E-mails which the men sent were more ambiguous than the government alleged, the lawyers for the two men said.

Jenny McCaughey, of Deer Park, on New York’s Long Island, served as the jury forewoman. She said the e-mails presented by the government as evidence cut both ways.

“They said one thing and another thing,” McCaughey said. “The government didn’t give us enough evidence to go on.”

‘24-7’
Aram Hong, a juror from Woodside, Queens, said the exchanges between Cioffi and Tannin shown to the jury proved to her that the two men were working “24-7” to save the funds in the months before they collapsed. She noted a defense exhibit that showed the fund managers were working at 4 a.m.

“If this was really a fraud case, they wouldn’t have worked that hard,” said Hong, 27, a food and beverage director at the Iroquois Hotel in midtown Manhattan, adding that she would invest with the two men if she had money.

Hong said another e-mail showed the defendants looking at all the elements of the market, not just the negative. She said they “took the time to compare and consider all elements.”

Hong said Cioffi and Tannin’s funds failed because of the lenders who stopped extending credit.

“At the end of the day, when the lenders said they were backing out, they had no choice,” she said.

Brooklyn U.S. Attorney Benton Campbell said he was disappointed with the verdict, “but the jurors have spoken.” Cioffi and Tannin still face Securities and Exchange Commission lawsuit as well as investor litigation.

‘Grateful’
Tannin said in a statement that he is “grateful for the jury’s hard work in weighing all the evidence.” Cioffi’s lawyer Dane Butswinkas said the defendants “appreciate the attention the jury gave the case.”

Prosecutors claimed that Cioffi moved $2 million -- one- third of his holdings in the funds -- to another Bear fund which he supervised. The U.S. alleged that he moved the money in March 2007 to a fund that was still profitable.

The government argued Cioffi committed insider trading when he moved the money ahead of investors who lost assets in his funds and while using material, non-public information because of his role as a fund manager.

Hong said of Cioffi’s insider trading charge that “if he had taken the money and put it in his own bank account that would be one thing, but it went to a Bear fund which he was also a portfolio manager over. I just don’t think you can blame him for that.”

Another juror, Ryan Goolsby of Williamsburg, Brooklyn, agreed, concluding that the government didn’t sufficiently prove any of its allegations.

“We never found anything beyond a reasonable doubt,” Goolsby said.

The case is U.S. v. Cioffi, 08-CR-00415, U.S. District Court for the Eastern District of New York (Brooklyn).

To contact the reporters on this story: Patricia Hurtado in U.S. District Court for the Eastern District of New York in Brooklyn at pathurtado@bloomberg.net and; Thom Weidlich in U.S. District Court for the Eastern District of New York in Brooklyn at tweidlich@bloomberg.net.

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