REFILE-New York AG hires prosecutor for mortgage probe

Mon Jun 4, 2012 5:51pm EDT

* Former fed prosecutor to help with mortgage probes

* Schneiderman is co-chair of Obama mortgage task force

By Karen Freifeld

NEW YORK, June 4 (Reuters) - New York Attorney General Eric Schneiderman has hired a former federal prosecutor to help bring lawsuits over misconduct in the mortgage-backed securities market during the financial crisis.

Virginia Chavez Romano, a former assistant U.S. attorney in New York, will help Schneiderman as he coordinates with a federal task force on the mortgage meltdown, Schneiderman spokesman James Freedland said on Monday.

The Obama administration formed the task force in January to probe fraud and abuse in the mortgage-backed securities market. Schneiderman is co-chairman of the group. So far, little activity has been made public and federal authorities have been criticized for not pouring enough resources into the effort.

Romano, who led an investigation into mismarked mortgage-backed securities while an assistant United States attorney, is working closely with the task force, Freedland said.

"Deputy Attorney General Romano brings a wealth of experience to her role helping to oversee our office's work investigating potential misconduct that led to crash of the mortgage market," Freedland said in a statement.

Romano could not be reached for comment.

The group met in Washington last week to "discuss and learn from ongoing investigations, identify new potential targets and successful legal theories, and coordinate strategies," Justice Department spokeswoman Adora Andy said.

While more than 25 civil subpoenas have been issued, the Justice Department has brought few cases against high-profile executives or financial institutions since the crisis.

The department closed criminal investigations without bringing charges against firms whose names are closely tied to the 2008 crisis, including AIG and Countrywide.

Individual Wall Street players have largely escaped prosecution, after the Justice Department lost its first criminal case against two former Bear Stearns hedge fund managers in 2009.

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