After nearly five years and two trials, Ex-Jefferies & Co. managing director Jesse Litvak is in prison in Florida serving his punishment for lying to his firm’s clients.
The first person arrested in the government’s crackdown on deceptive bond trading tactics was taken to the minimum-security federal prison camp in Pensacola, Florida, where he began his two-year sentence. The 700-inmate facility is about a nine-hour drive from his Boca Raton home. Litvak was originally scheduled to surrender on Sept. 12, but his report date was pushed back by a week as Hurricane Irma approached Florida.
Litvak, 42, has been living with his family in Boca Raton since moving out of New York following his January 2013 arrest. The former trader was convicted in January of securities fraud and sentenced to spend two years in prison and pay a $2 million fine.
His arrest presaged a broader crackdown on questionable tactics that has led to charges against another half-dozen traders and the departure of dozens more from their jobs. He was found guilty of 15 fraud counts at his first trial in 2014 before an appeals court threw out the conviction. In May, U.S. District Judge Janet C. Hall in New Haven, Connecticut imposed the same prison sentence she had given Litvak after his first conviction, while boosting the fine by $250,000.
Sentence Request
Litvak had sought to serve his punishment under house arrest, saying that he was the primary caregiver to his two children while his wife runs a dental practice in Boca Raton. That bid was opposed by prosecutors, who said Litvak had "every advantage in life."
The Pensacola prison opened in 1988 in unused buildings at the U.S. Navy’s Saufley Field, and inmates are assigned to ground maintenance duties at nearby Navy facilities, such as grass cutting and landscape management.
Former inmates include the ex-National Football League running back Jamal Lewis, who served four months in Pensacola in 2005 for using a cell phone to attempt to set up a cocaine deal, and former National Basketball Association referee Tim Donaghy, convicted in 2008 of wagering on games and passing on inside information. Former Goldman Sachs & Co. partner Robert Freeman spent four months at the facility in 1990 after pleading guilty to insider trading.
The charges against Litvak sent shock waves rippling through Wall Street as traders suddenly faced the prospect of serving time in federal prison for tactics that they maintain have been used in the marketplace for decades. The court verdict helped to bolster prosecutors’ contentions that lying to even the most-sophisticated customers can amount to securities fraud.
Meanwhile, the cases of those nabbed in the crackdown continue to wind their ways through the courts. Michael Gramins, one of three Nomura Holdings Inc. bond traders charged by prosecutors with similar behavior, was convicted of one count of conspiracy to commit securities fraud after a month-long trial in Hartford earlier this year, while jurors cleared him of six fraud counts and deadlocked on another two.