A former managing director at the New York investment banking firm Jefferies and Co. has been convicted of multiple offenses involving a scheme to defraud customers trading in residential mortgage-backed securities.

Jesse Litvak, a registered broker-dealer, was convicted Friday by a federal jury in New Haven, Conn., of 10 counts of securities fraud, one count of defrauding the Troubled Asset Relief Program and four counts of making false statements within the jurisdiction of the U.S. government.

Court evidence in the three-week trial that began on Feb. 18 revealed that Litvak engaged in two types of misrepresentations. First, as a broker-dealer, only Litvak knew the selling and asking prices of the RMBS bond and exploited this information by falsifying the seller's asking price to the buyer and also misrepresenting the buyer's asking price to the seller. By executing this type of strategy, Litvak stole the difference in the price paid by the buyer and the price paid to the seller.

Another part of the scam involved the defendant taking bonds held in Jefferies' inventory and selling them to RMBS buyers only after creating a fictitious third-party seller. This allowed Litvak to charge the buyer an extra commission that the banking firm was not entitled to because it was selling its own bonds.

Through these schemes, Litvak stole more than $2 million from multiple private investment funds set up the Treasury Department to restart the trading markets for many troubled securities in response the 2008 financial collapse.

Litvak was the first person arrested and convicted for a crime related to the Tarp bailout program, which infused between $1.4 billion and $3.7 billion of bailout money into the Legacy Securities Public-Private Investment Program.

"Trading in mortgage securities can be a complicated business, but what the defendant did was simple, he lied to, defrauded, and illegally overcharged customers out of pure greed to benefit Jefferies and himself," said Christy Romero, special inspector general for Tarp.

Litvak is scheduled to be sentenced at the end of May; he faces at least 20 years in prison.

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