Wall Street investment tricksters to get tougher rap
July 4, 2008
US financial criminals who have the means and motives to flee may face stiffer penalties after prosecutors ended an expensive and embarrassing manhunt for a hedge fund swindler this week.
For years, judges have treated white-collar criminals who cheated investors more gently than murderers and armed robbers, often allowing them time to order their affairs before reporting to prison.
But those days are over. Prosecutors are investigating how prominent Wall Street investment banks and their wealthy bankers may have sparked the global credit crisis.
"We are seeing an increased level of enforcement right now because the country is roiling in the wake of how these managers packaged bad loans," said Robert Delahunt, a partner in law firm Mintz.
The US government's tougher attitude was on display two weeks ago, when agents handcuffed former Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin when they arrested them to face charges that they had lied to investors about the safety of their funds.
Billions of dollars were lost when these portfolios collapsed last year, paving the way for Bear Stearns' eventual demise, when thousands lost their jobs.
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