Ex-Credit Suisse broker fraud case goes to Brooklyn

* Butler wire fraud case moves to Brooklyn from Manhattan

* Defendant said trial in Manhattan would be duplicative

NEW YORK, July 25 (Reuters) - Former Credit Suisse Group AG (CSGN.VX) broker Eric Butler, convicted of cheating investors out of $1.12 billion, on Monday won the transfer of a separate wire fraud case in Manhattan to the same Brooklyn federal judge who presided over his 2009 trial.

The transfer ordered by U.S. District Judge Paul Gardephe in Manhattan is a victory for Butler, who said continuing the government's case in that borough alleging seven wire fraud counts could subject him to a "duplicative and unnecessary" trial in a different court over the same underlying conduct.

Prosecutors had argued Butler was trying to "manipulate the judicial system" in search of a lenient punishment.

The court change, however, could backfire against Butler if new evidence of his guilt were to surface. [ID:nN17253465]

Butler, who worked in Manhattan, was charged with trying to win higher commissions by misleading clients into believing they were buying safe securities backed by federally guaranteed student loans, and instead selling them auction-rate securities backed by risky mortgage and corporate debt.

Many auction-rate securities became illiquid when that $330 billion market collapsed in February 2008.

A Brooklyn jury had in August 2009 convicted Butler of conspiracy and securities fraud, after former co-defendant Julian Tzolov testified against him. U.S. District Judge Jack Weinstein then sentenced Butler to five years in prison.

Last month, the 2nd U.S. Circuit Court of Appeals threw out the securities fraud conviction. It said that charge should not have been brought in Brooklyn, located in the Eastern District of New York, just because Butler would fly from John F. Kennedy International Airport in that district to meet clients.

Manhattan is in the Southern District of New York.

Weinstein later said it was "unlikely" he would shorten the prison term, but suggested that Butler try moving the Manhattan wire fraud case to Brooklyn. Butler could nonetheless face more prison time if Tzolov were to provide new evidence tying him to wire fraud in the Eastern District.

Tzolov is serving a four-year prison term after pleading guilty in July 2009. Butler has been free on bail.

The cases are U.S. v. Tzolov et al, U.S. District Court, Eastern District of New York, No. 08-00370; and U.S. v. Butler et al, U.S. District Court, Southern District of New York, No. 09-00685. (Reporting by Jonathan Stempel, editing by Bernard Orr)