Nov. 1 (Bloomberg) -- The wife of former Credit Suisse Group AG broker Eric Butler, convicted in a $1 billion fraud case, can’t keep funds in the couple’s jointly used accounts, a Brooklyn, New York, federal judge ruled.
Elizabeth Butler doesn’t have a legal interest in the assets in the accounts, described in court filings as being jointly used despite being in Eric Butler’s name, U.S. District Judge Jack Weinstein ruled in an order filed Oct. 31. Weinstein agreed with a U.S. magistrate judge’s recommendation that her efforts to seek an injunction barring the government from taking all the assets be denied. The money in question totals $736,060, according to court records.
Elizabeth Butler argued that the accounts should be considered joint marital property under New York law because a portion of the funds came from her earnings as an executive assistant and rent from a jointly-owned apartment in Florida, according to court filings. Butler had shown that she is struggling economically to support her child, Weinstein said.
“As in many instances of war, the law here punishes the innocent at least as much as the guilty,” Weinstein said. “The court regrets the burden that this decision places on Mrs. Butler and her family.”
Eric Butler was convicted by a federal jury in Brooklyn in August 2009 of intentionally misleading clients about their investments by telling them that securities they were buying were backed by federally guaranteed student loans when they were actually tied to the housing market. Victims’ losses were more than $1.1 billion, according to the government.
On Oct. 23, an appeals court affirmed Butler’s five-year prison sentence. The government is seeking the proceeds of the joint accounts to satisfy a $5 million fine and $250,000 forfeiture order.
The case is U.S. v. Tzolov, 08-cr-370, U.S. District Court, Eastern District of New York (Brooklyn).
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