This one is going to be big.
Not only is the trial of former Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin the sole major criminal prosecution stemming from the financial crisis, but, as we’ve noted, it’s a broader test of the fine line between salesmanship and fraud.
WSJ’s Law Blog has a nice run-down today of the pre-trial, which has seen new allegations introduced and a fight over admissible evidence.
Specifically, prosecutors are trying to admit evidence at trial that:
- Cioffi and Tannin effectively committed bank fraud.
- Cioffi tried to obtain documents in Florida that were the subject of a government subpoena.
- Tannin’s Tablet PC, which he used as an electronic notebook, and a handwritten trading notebook used by Cioffi between January 2007 and June 2007 — which includes the period of the alleged fraud — are missing.
Then there’s the Gmail issue. As Law Blog notes, “Tannin allegedly shut down his personal Google email account in March 2008, several months before he was charged, after he was aware the government had interest in the account and after it ordered that all emails and documents relevant to the hedge funds be preserved.”
The Gmail account is critical because it’s where Tannin may have written damning emails — privately saying that the funds were in serious trouble while publicly crowing about their success. defence lawyers say the firm told Tannin to shut down the account and besides, there’s no legal obligation to turn over the emails.
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