Butler, Eric - Ex-Credit Suisse Broker Starts F...
Ex-Credit Suisse Broker Butler Sentenced to 5 years
By Thom Weidlich September 09, 2011
Sept. 9 (Bloomberg) -- Former Credit Suisse Group AG broker Eric Butler, convicted two years ago of committing a $1 billion fraud, began his five-year sentence at a New Jersey prison where he will be able to earn as much as 40 cents an hour.
Butler, 40, reported at about 2:30 p.m. today to a minimum- security prison camp adjacent to the federal prison in Fort Dix, New Jersey, said Wiley Jenkins II, a spokesman for the institution. Inmates in the camp earn 12 cents to 40 cents an hour tutoring or doing facilities work such as plumbing.
“I can confirm for you that Eric Butler is here,” Jenkins said in a phone interview.
A federal jury in Brooklyn, New York, convicted Butler in August 2009 of intentionally misleading his institutional clients, including GlaxoSmithKline Plc and Roche Holding AG, about securities purchased on their behalf. Victims’ losses were more than $1.1 billion, according to the government.
Butler’s partner, Julian Tzolov, who was indicted with him, testified against Butler. Tzolov, a native of Bulgaria, had fled the U.S. and was captured in Spain after an international manhunt. He pleaded guilty upon his return to the U.S. and was sentenced in June to four years in prison.
Steven Molo, one of Butler’s lawyers at Molo Lamken LLP in New York, didn’t immediately return a call seeking comment on his client’s incarceration.
No Fence
The Fort Dix camp has no perimeter fence and its 398 inmates sleep in dormitory-style housing, Jenkins said. The facility has a softball field, walking track and exercise equipment. It also has a commissary that sells personal hygiene items and snacks, he said.
Butler and Tzolov falsely claimed that the securities they put their clients in were backed by federally guaranteed student loans, according to prosecutors in the office of U.S. Attorney Loretta Lynch in Brooklyn.
The men told clients the investments, actually backed by riskier corporate debt and subprime mortgages, were a safe alternative to bank deposits or money-market funds, according to Lynch’s office.
The jury found Butler guilty of securities fraud, conspiracy to commit securities fraud and conspiracy to commit wire fraud.
The federal appeals court in Manhattan in June overturned the securities-fraud conviction, saying the charge should have been tried in federal court in Manhattan, where Credit Suisse has its office, rather than in Brooklyn. The appeals panel upheld the two conspiracy convictions.
Counts Moved
Butler then got seven wire-fraud counts in Manhattan federal court moved to Brooklyn and consented to having the securities-fraud count there as well. On Aug. 23, Butler pleaded guilty to those counts, which all stemmed from the same activity, and U.S. District Judge Jack B. Weinstein sentenced him to the same five years he had imposed in 2010. The judge also re-imposed a $5 million fine on the securities-fraud conviction.
The case is U.S. v. Tzolov, 08-cr-370, U.S. District Court, Eastern District of New York (Brooklyn).