Former Jefferies & Co. managing director Jesse Litvak, the only person convicted of fraud related to a $20 billion government bail-out program, may spend almost a decade in prison for lying to his customers about mortgage-backed securities, Bloomberg reported today. Litvak was found guilty by a jury in March of securities fraud and making false statements, as well as fraud connected to the U.S. Treasury Department’s Troubled Asset Relief Program. His conviction is the first in connection with the Public-Private Investment Program, an initiative that used TARP funds to spur investments in mortgage-backed securities after the 2008 financial crisis. Litvak is scheduled to be sentenced today by U.S. District Judge Janet Hall. Prosecutors have asked Judge Hall to send the former trader to federal prison for nine years and have him pay a $5 million fine. Litvak’s lawyers have asked the judge to sentence their client to no more than 14 months in prison, saying that his actions did not affect Jefferies customers’ investment decisions or their returns.
