Broker who cost investors $1B ordered to prison

Former Credit Suisse Group AG broker Eric Butler, free while appealing his conviction for fraudulently selling subprime securities that cost investors more than $1.1 billion in losses, was ordered to begin serving his prison sentence. U.S. Magistrate Judge Ramon Reyes revoked Butler’s bail today in Brooklyn, New York, granting a request by prosecutors in the office of Brooklyn U.S. Attorney Benton Campbell. “Butler has failed to raise a substantial question of law or fact” showing that his conviction might be reversed or overturned for a new trial, or that his sentence may reduced to exclude imprisonment, Reyes said in a 15-page ruling. U.S. District Judge Jack Weinstein sentenced Butler to five years in prison in January. Butler was found guilty in August of conspiracy to commit securities fraud, securities fraud and conspiracy to commit wire fraud. Butler can appeal Reyes’s ruling with Weinstein. Unless Weinstein delays or reverses today’s order, Butler must surrender to the U.S. Marshal’s office in 30 days, Reyes said. Butler’s lawyer, Steven Molo, didn’t immediately return a voice-mail message left at his office seeking comment. Paul Weinstein, Butler’s trial lawyer, declined to comment. Butler was indicted with Julian Tzolov in 2008. Prosecutors claimed the men falsely told clients their securities were backed by federally guaranteed student loans and were a safe alternative to bank deposits or money-market funds. The products were actually linked to auction-rate securities and generated high commissions for the pair, witnesses testified during Butler’s three-week trial. Tzolov, who was returned to New York from Spain in July after fleeing prosecution, pleaded guilty that month to conspiracy, wire fraud and securities fraud. He testified as a prosecution witness against Butler, his former partner. The case is U.S. v. Tzolov, 08-cr-370, U.S. District Court, Eastern District of New York (Brooklyn).