| NEW HAVEN, Conn.
NEW HAVEN, Conn. Feb 20 A lawyer for Jesse
Litvak, on trial on charges he defrauded clients and the United
States on bond trades, on Thursday tried to discredit one of the
government's main witnesses against the former Jefferies Group
Michael Canter, senior vice president and director of
securitized assets at AllianceBernstein Holding LP, had
testified on Wednesday that he had yelled at Litvak and pressed
for an investigation after reviewing a spreadsheet that
suggested he was being shortchanged on trades.
But during cross-examination, Litvak's attorney, Patrick
Smith, got Canter to admit that the prices the defendant gave
him did not appear bad at the time.
"If you didn't like the price, you just didn't have to do it
(the trade), isn't that correct?" Smith said. "You always had
the ultimate opportunity not to make the bid, but you believe
you were getting a good price at the time."
"Yes, we always had the control," Canter responded, pausing
to drink from a water bottle. "With what we knew at the time, it
seemed like a good price.
"Isn't it true that only later, upon discovering the price
could have been better, that you became upset?" Smith then
"Yes," Canter responded.
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 was one participant in a TARP program
intended to help rebuild a market for troubled mortgage debt.
Prosecutors have accused Litvak of cheating customers on
residential mortgage-backed securities trades in a $2 million
scheme designed to boost Jefferies' revenue and his pay.
Smith had previously conceded that Litvak did not always
tell the truth when advising investors, but simply did what his
supervisors told him to do.
On Thursday, he asked Canter whether AllianceBernstein,
which ended 2013 with $450.4 billion of assets under management,
at times also posted misleading prices, and that this was an
accepted practice among brokers.
"So, your interpretation is that when it benefits
AllianceBernstein, when it favors your investors, then it's OK?"
Canter, after hesitating, answered: "I believe it is OK."
On redirect questioning, Assistant U.S. Attorney Jonathan
Francis sought to counteract the idea that Litvak's activities
were considered acceptable in the industry.
"What was your exact complaint about the way Mr. Litvak had
conducted himself?" he asked Canter.
"We were asked to raise our bids when it turned out we
didn't have to," Canter replied. "I would characterize what he
did as lying, and it turned out that it was something he had
been doing continuously."
Litvak was fired by Jefferies in December 2011 and was
indicted in January 2013.
He has pleaded not guilty to 10 counts of securities fraud,
one count of TARP fraud and four counts of making false
statements. If convicted, Litvak faces up to 20 years in prison
on each fraud count.
The defendant also faces related U.S. Securities and
Exchange Commission civil charges.
After jurors were dismissed for the day, prosecutors told
the presiding judge, Chief Judge Janet Hall, that they expect to
question more alleged fraud victims on Friday and Monday, and
could rest their case on Tuesday.
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.