Lawyers for two former Bear Stearns hedge fund managers and federal prosecutors used pretrial motions in the fraud case to snipe at one another.
Representatives of Ralph Cioffi and Matthew Tannin, who are accused of misleading investors in a pair of mortgage hedge funds that imploded two years ago, say the government is hampering its case by turning over millions of documents without providing a roadmap. The prosecutors’ complaint is not about too much discovery, but too little: They say Cioffi’s and Tannin’s lawyers have failed to produce anything.
“Discovery in this matter has left the defense looking for a needle in a haystack,” Cioffi’s attorneys wrote in their motion. They said that prosecutors had produced nearly 9 million documents but “has refused to provide any guidance to the defense as to what within this mountain of discovery really is at issue.”
They asked the judge to order their adversaries to do just that.
Federal prosecutors in Brooklyn, N.Y., countered that “the defendants have produced nothing.”
Cioffi and Tannin have been charged with conspiracy and securities fraud, with Cioffi, the funds’ senior portfolio manager, also charged with insider trading. The charges stem from the collapse of the Bear Stearns High Grade Structured Credit Fund and a more highly-levered sister fund, which cost investors more than $1.5 billion and helped sink Bear itself. According to prosecutors, Cioffi and Tannin misled investors about the condition of the funds just as the subprime mortgage crisis began to batter its investments.
Cioffi faces as much as 40 years in prison if convicted, with Tannin looking at 20 years.