Wife of Convicted Ex-Credit Suisse Broker Seeks Assets

The wife of Eric Butler, a former Credit Suisse Group AG broker convicted in a $1 billion fraud, is protesting the government’s efforts to take over joint assets, according to a federal court filing.

Elizabeth Butler objected today to a recommendation that the proceeds of joint accounts go to the government to satisfy a $5 million fine and $250,000 forfeiture order. Eric Butler began serving a five-year sentence in September for crimes associated with misleading clients about securities investments.

The government and the court “take the position that because certain assets in the web of linked accounts were in Mr. Butler’s name alone, this justifies giving Mrs. Butler nothing from the accounts always considered hers, and holding funds she earned,” according to the objection filed on behalf of the Butlers.

A federal jury in Brooklyn, New York, convicted Butler in August 2009 of intentionally misleading his institutional clients, including GlaxoSmithKline Plc and Roche Holding AG, about securities purchased on their behalf. Victims’ losses were more than $1.1 billion, according to the government.

Butler and his partner, Julian Tzolov, who testified against him at trial, falsely told their clients that securities they were buying were backed by federally guaranteed student loans. Tzolov pleaded guilty and was also sentenced to prison.

Joint Property

In her objection, Elizabeth Butler asked for half of the funds in the couple’s accounts, arguing that they should be considered joint marital property under New York law. Further, a significant portion of the funds came from her earnings as an executive assistant and rent from a jointly owned apartment in Florida, according to the filing.

Magistrate Judge Ramon E. Reyes Jr. issued a recommendation in June that Butler not be allowed to stop the government from taking the funds in the accounts, which are frozen. All of the accounts at issue are held solely in Eric Butler’s name, and his wife contributed only to one of them, Reyes said in the recommendation. The Butlers received $65,000 from that account for living expenses during the criminal case, according to the filing.

A federal judge hasn’t yet ruled on whether to adopt the recommendation.

Robert Nardoza, a spokesman for the U.S. Attorney for the Eastern District of New York, declined to comment on Elizabeth Butler’s objection.

The case is U.S. v. Tzolov, 08-cr-370, U.S. District Court, Eastern District of New York (Brooklyn).

Before it's here, it's on the Bloomberg Terminal. LEARN MORE