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New Haven (AP) - A federal judge sentenced a former Wall Street trader to two years in prison on Wednesday for securities fraud, saying he took advantage of a government bailout program.
The judge also fined Jesse Litvak $1.75 million.
"This was a market that was dead in the water," Judge Janet Hall told Litvak. "This was a market that existed because of taxpayer money and you were in effect taking advantage of it through fraud."
Litvak was found guilty in March of securities fraud, Troubled Asset Relief Program fraud and making false statements to the federal government.
He was the first person convicted of a crime related to the program that used bailout funds in the financial meltdown to restart trading markets for mortgage-backed securities.
Litvak defrauded private investment funds and funds established by the U.S. Treasury with government bailout money in response to the 2008 financial crisis, prosecutors said. They say Litvak duped 35 victims into paying artificially increased prices or accepting artificially decreased prices for bonds they were buying or selling, netting $6.3 million in fraudulent profits for the company for which he worked.
"The government hopes that this sentence and this prosecution sends a strong message to Wall Street and those on Wall Street that lie to their customers and cheat the investors," U.S. Attorney Deirdre Daly said.
Prosecutors had sought a sentence of nine years. The judge said Litvak did not receive the profits himself, though she said he benefited from higher bonuses of $700,000 to $1 million that she attributed to the fraud, and said she did not believe Litvak would commit another crime.
Hall rejected Litvak's argument that he was singled out for conduct others had committed as well.
"You lied," Hall told Litvak. "Maybe that's what people do every day on Wall Street. It still doesn't make it legal."
Litvak's attorney, Patrick Smith, argued during the trial that his client sold bonds at great prices to sophisticated buyers. He said Litvak engaged in typical sales tactics and followed company rules.
Litvak sought a sentence of up to 14 months, saying investors paid fair market value for the bonds and that they performed well.
Litvak, of New York City, was a registered broker-dealer and managing director at Jefferies & Co. Inc. who worked on the company's trading floor in Stamford. He was fired in 2011.
Jefferies disclosed in a regulatory filing in January that it agreed to pay $25 million to settle federal criminal and civil investigations related to mortgage-backed securities.