| NEW HAVEN, Conn.
NEW HAVEN, Conn. Feb 19 A senior
AllianceBernstein Holding LP executive testified on
Wednesday that former Jefferies Group Inc banker Jesse Litvak
misled him into overpaying for bonds, prompting him to press for
Michael Canter, senior vice president and director of
securitized assets at AllianceBernstein, told jurors at Litvak's
fraud trial that his suspicions were aroused after he received
an email that contained an attached spreadsheet detailing
Litvak's trades and "filled with discrepancies."
Under questioning from federal prosecutor Jonathan Francis,
Canter said he thought "it all could be worked out" but changed
his mind as a result of a three-way call in November 2010 with
Litvak and the sales representative who had mistakenly sent the
"Mr. Litvak said, yes, he was sorry, but they were doing
whatever they could to make money and that he hoped we could
still continue doing business," Canter told jurors in U.S.
District Court in New Haven, Connecticut.
"It was clear that he had lied to us, and I yelled at him
that I couldn't believe what he was freaking doing to me and our
company," Canter continued. "I really took it personally, but I
knew it was up to my superiors and the (U.S.) Department of the
Treasury to decide what to do." Canter said he also advised his
traders not to do business with Jefferies.
Prosecutors have accused Litvak, 39, of cheating customers
on residential mortgage-backed securities trades in a $2 million
scheme designed to boost Jefferies' revenue and his own pay.
The case is the first brought under a 2009 law banning major
fraud against the United States through the $700 billion federal
bailout known as the Troubled Asset Relief Program, or TARP.
AllianceBernstein, which ended 2013 with $450.4 billion of
assets under management, was among the participants in a program
under TARP that was intended to help rebuild a market for
troubled mortgage debt.
The trial began on Tuesday. One of Litvak's attorneys,
Patrick Smith, told jurors during his opening argument that
while his client did not always tell the truth when advising
investors, he did what he was taught by supervisors, and that
prosecutors will be unable to prove a crime was committed.
Litvak worked for Jefferies between 2008 and December 2011,
when he was fired. He has pleaded not guilty to 10 counts of
securities fraud, one count of TARP fraud and four counts of
making false statements.
The defendant faces up to 20 years in prison on each fraud
count if convicted.
Canter's testimony, including cross-examination by Litvak's
attorneys, is expected to continue into Thursday. The trial is
expected to last about four weeks.
Jefferies is now part of Leucadia National Corp.
The cases are U.S. v. Litvak, U.S. District Court, District
of Connecticut, No. 13-cr-00019; and SEC v. Litvak in the same
court, No. 13-00132.