Billion dollar mortgage fraud scheme unveiled
Story By: Bea Karnes
Source: AP
Federal authorities have accused two former Wall Street brokers of defrauding customers by making more than $1 billion in unauthorized purchases of securities tied to subprime mortgages.
In the indictment unsealed in federal court, the two former Credit Suisse Securities brokers were charged with deceiving customers in a bid to pump up commissions. The charges are against Julian Tzolov and Eric Butler, as announced by the U.S. Attorney in Brooklyn.
They are charged with securities fraud, wire fraud and conspiracy. The charges carry maximum total sentences of 25 years and up to 5 and a-quarter million dollars in criminal fines. The Securities and Exchange Commission filed a related civil lawsuit, alleging that Tzolov and Butler led corporate customers to believe that auction-rate securities being purchased in their
accounts were backed by federally-guaranteed student loans and were safe like cash. The SEC seeks restitution and fines against the brokers, suspended by Credit Suisse last year.
