In court appearances Wednesday, Mr. Higgs, 42, and Mr. Siddiqui, 36, both said that they participated in the fraud at the direction of Mr. Serageldin.

“The stunning scale of the illegal mismarking in this case was surpassed only by the greed of the senior bankers behind the scheme,” said Robert Khuzami, the head of enforcement at the Securities and Exchange Commission, which brought a parallel civil action against the former Credit Suisse traders. The assets that the Credit Suisse traders overvalued were mortgage-backed securities, the bonds that caused hundreds of billions of dollars in losses across the global financial system.

3 Former Traders at Credit Suisse Charged With Bond Fraud [Dealbook]

Tom Petters is currently serving a 50-year sentence, a conviction that was handed down last year for masterminding a $3.7 billion Ponzi scheme that involved electronics. Prosecutors had been asking for a 335 year sentence while his attorneys asked for one of just four years – end result was fifty. By comparison, Madoff’s Ponzi scheme took nearly $65 billion (though a court-appointed trustee estimates the actual losses to around $18 billion).

How were Harrold and Prevost involved? They allegedly told investors that Tom Petters’ company, Petters Co. Inc., was profitable and Vennes told those two to only communicate with him when dealing with PCI. For their work, they received $60 million in commissions.

The Minneapolis Star Tribune reports that the hedge funds began investing with Petters in 2002 and eventually rolled about $8 billion into PCI notes – substantially all of their investors’ funds, the indictment said. When the alleged scheme collapsed in September 2008, the hedge funds reportedly held about $1 billion in PCI investments. Harrold and Prevost’s companies allegedly grossed more than $58 million in management fees.

3 Fla. men indicted in wake of $3.7B Ponzi scheme [Miami Herald]

The SEC’s complaint alleges that from at least 2005 to April 2008, Pimstein and his agents offered and sold more than $30 million in securities to at least 80 investors in at least five states, purportedly to fund an export business that Pimstein operated through Bottom Line and Summit. The Ponzi scheme collapsed when the interest and principal Bottom Line and Summit were obligated to pay investors substantially exceeded the amount of new funds Pimstein and his agents were able to raise from investors.

Pimstein is done since he admitted to police he had operated the scheme in the first place.

Motz owned 9% of the firm and was president, chief operating officer, executive committee chairman and the compliance officer. The Securities and Exchange Commission filed civil charges against Motz in 2007 that were similar to the ones filed by federal prosecutors in late August.

In one scheme, between November 2002 and September 2003, Motz retroactively credited profitable stock trades to his firm and unprofitable ones to a hedge fund called Third Millennium, the indictment said. The fund’s partners were “primarily high-net-worth individuals,” according to the indictment.

Between November 200 and September 2003, Motz assigned 203 of his trades to the firm. 202 of those were profitable.

Quogue mayor indicted on securities fraud
[Newsday]

To add insult to injury, the Securities and Exchange Commission tacked on a civil fraud complaint for their trouble. The two went as far as telling sales assistants to send email confirmations with the terms “St. Loan” (for student loan) and “Education” tacked onto the names of their securities, to make them seem more like they were backed by safe student loans and not subprime mortgages.

2 ex-Credit Suisse brokers charged in bln-dlr subprime fraud [AP]

Allegedly investors were investing in domestic and international real estate and could expect 100% returns over the course of a year, with a minimum investment of $3000. With a $3000 investment, you could expect to see $500 monthly payments for 12 months.

Ticket-Taker Faces SEC Fraud Charges [Wolters Kluwer Financial Services]

In a separate indictment released on Thursday, the Securities and Exchange Commission charged the same two ex-Bear Stearns fund managers with defrauding investors as the subprime mortgage market began to collapse. The civil indictment comes at the same time as the U.S. Justice Department’s criminal indictment.

I’m surprised it took this long to get an indictment considering the funds failed in the summer of 2007. The two men are charged with defrauding investors and costing them at least $1 billion through their actions. The main charge is that they covered up the problems with their investments and then tried to get their own money out before recovering investors money.

Sifting Through the SEC Charges of Two Former Bear Stearns Managers [Fox Business]