March 13 (Bloomberg) -- Ex-Jefferies & Co. managing director Jesse C. Litvak will go on trial in February on charges that he defrauded customers of more than $2 million on trades of residential mortgage-backed securities.
Litvak, 38, of New York, was arrested Jan. 28 and charged with 16 counts including securities fraud, fraud connected with the Troubled Asset Relief Program and making false statements to the federal government.
Alleged victims include “numerous” investment funds, among them six established by the U.S. Treasury Department in 2009 as part of its response to the financial crisis, according to Connecticut U.S. Attorney David Fein. Litvak, who has been sued by the U.S. Securities and Exchange Commission, is also accused of defrauding private investment funds.
Jury selection in the case had been scheduled to start in April. During a hearing in New Haven today, Judge Janet C. Hall said she expects jury selection in the trial to begin in late February of next year, giving both sides plenty of time to resolve financial issues and to pore through 400,000 pages of documents.
“You will go on trial in February -- whatever or high water,” Hall said, adding that the trial will commence even if the government issues new indictments that produce additional defendants.
Patrick J. Smith, Litvak’s attorney, said he needed more time to “resolve the funding issues.” Litvak and Jefferies are engaged in legal action over his termination agreement, and Litvak needs the money in order to proceed, Smith said.
“We just can’t go out and get experts with the budget we’re working on,” Smith said.
Litvak said in a Delaware Chancery Court filing in October that he was under investigation by the U.S. attorney for Connecticut, the Office of the Special Inspector General for the Troubled Asset Relief Program, Finra and the SEC, and that he was seeking money from Jefferies to cover his legal expenses.
The firm said in a court filing that the matter should be resolved in arbitration, and a special master recommended earlier this month that Litvak’s complaint be dismissed in favor of arbitration. Litvak has opposed the special master’s recommendation, and both parties have requested an expedited hearing to consider Litvak’s proposed challenges.
Assistant U.S. Attorney Jonathan Francis said the government preferred to try the case later this year, adding Litvak has made more than $8 million in his three years at Jefferies.
“He has more than enough resources to prepare for his defense,” Francis said.
The criminal case is USA v. Litvak, 3:13-cr-00019-JCH-1, and the civil case is SEC v. Litvak, 13-cv-00132, U.S. District Court, District of Connecticut (New Haven).
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