Ex-Credit Suisse Broker Butler Is Resentenced to Five Years
Former Credit Suisse Group AG (CSGN) broker Eric Butler, convicted by a jury of securities fraud in 2009, won’t have his prison sentence extended after pleading guilty to seven wire-fraud counts stemming from the same actions.
Butler, 39, was resentenced to five years in prison today by U.S. District Judge Jack B. Weinstein in Brooklyn, New York, and ordered to surrender Sept. 9 at the federal prison in Fort Dix, New Jersey. In January 2010, the judge imposed the same penalty for Butler’s jury convictions for securities fraud, conspiracy to commit securities fraud and conspiracy to commit wire fraud.
“I regret my actions,” Butler told Weinstein before he was sentenced.
Butler and his partner, Julian Tzolov, were convicted in 2009 of intentionally misleading clients about securities purchased on their behalf.
The federal appeals court in Manhattan in June overturned Butler’s securities-fraud conviction, saying it should have been tried in federal court in Manhattan rather than in Brooklyn. It upheld his two conspiracy convictions. Butler then got the wire- fraud counts moved from Manhattan to Brooklyn and consented to having the securities-fraud count there as well. He also pleaded guilty to the securities-fraud charge today.
“This puts the matter behind Mr. Butler and he’s eager to get on with his life,” one of his lawyers, Steven F. Molo, said after the sentencing.
Molo, of Molo Lamken LLP in Manhattan, had asked Weinstein to give his client less than five years because he has been seeing a therapist and organizing activities for neighborhood children.
“Then, as now, the defendant stands before you convicted of a $1 billion fraud,” Assistant U.S. Attorney Daniel A. Spector said to Weinstein. “The defendant clearly already got a break,” he said, referring to the fact that the five-year term is below the nonbinding guideline.
Butler and Tzolov falsely claimed the securities they put their clients in were backed by federally guaranteed student loans, according to prosecutors in the office of U.S. Attorney Loretta Lynch.
The men told clients the investments, actually backed by riskier corporate debt and subprime mortgages, were a safe alternative to bank deposits or money-market funds, according to Lynch’s office. Victims’ losses were more than $1.1 billion, according to the government.
Credit Suisse Offices
Last year, Weinstein sentenced Butler to five years in prison on each of the three counts he was found guilty of, to be served concurrently. He also imposed a $5 million fine on the securities-fraud conviction. He reinstated that fine today.
The appeals court had said the securities fraud count should have been tried in Manhattan because that’s where Credit Suisse has its office.
Butler and Tzolov were indicted in 2008. Tzolov, a native of Bulgaria, fled the U.S. before being returned from Spain in July 2009 and pleading guilty. On June 7, Tzolov was sentenced to four years in prison, with 1 1/2 years of that for bail jumping. He testified against Butler.
The case is U.S. v. Tzolov, 08-cr-370, U.S. District Court, Eastern District of New York (Brooklyn).
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