Former Credit Suisse Broker Avoids Prison While Judge Reviews Bail Order
Former Credit Suisse Group AG broker Eric Butler will remain free while a judge reviews a decision that ordered him to prison during the appeal of his conviction for fraudulently selling securities that cost investors more than $1.1 billion in losses.
U.S. District Judge Jack B. Weinstein in Brooklyn, New York, said today Butler can stay out of prison while the judge reviews the April 27 decision revoking the ex-broker’s bail. Butler is scheduled to go before Weinstein again on June 25 to see if he can stay free on bail while he challenges his verdict at the U.S. Court of Appeals in Manhattan.
“You may be right that there is no issue on appeal, but from time to time I’m surprised,” Weinstein told prosecutors. Butler also is the main caregiver for a child while his wife works, the judge said, citing Butler’s lawyer. “I see no reason to incarcerate him,” Weinstein said.
In a May 4 letter, Butler’s lawyer Steven Molo asked Weinstein to stay the order forcing his client to prison by May 27. Molo said it would be unfair for Butler to be held in custody if Weinstein later rules that he can remain free while he appeals the conviction.
Weinstein sentenced Butler to five years in prison in January. Butler was found guilty in August of securities fraud, conspiracy to commit securities fraud and conspiracy to commit wire fraud.
“Butler has failed to raise a substantial question of law or fact” showing that his conviction might be reversed or overturned for a new trial, or that his sentence may reduced to exclude imprisonment, U.S. Magistrate Judge Ramon Reyes said in his order sending Butler to prison while he appeals the verdict.
“The defendant’s request is no more than a transparent attempt to delay the inevitable imposition of his sentence,” prosecutors wrote to Weinstein on May 5 in response to Molo’s letter.
“It’s not appropriate to delay justice that long,” Daniel Spector, an assistant U.S. attorney, told Weinstein today. “The time has come for the imposition of sentence.”
Butler was indicted with Julian Tzolov in 2008. Prosecutors claimed the men falsely told clients their securities were backed by federally guaranteed student loans and were a safe alternative to bank deposits or money-market funds. The products were actually linked to auction-rate securities and generated high commissions for the pair, witnesses testified during Butler’s three-week trial.
Tzolov, who was returned to New York from Spain in July after fleeing prosecution, pleaded guilty that month to conspiracy, wire fraud and securities fraud. He testified as a prosecution witness against Butler, his former partner.
The case is U.S. v. Tzolov, 08-cr-370, U.S. District Court, Eastern District of New York (Brooklyn).
To contact the reporters on this story: Tiffany Kary in Brooklyn, New York, federal court at 1459 or firstname.lastname@example.org; Thom Weidlich in Brooklyn, New York, federal court at email@example.com.