Judge Jack Weinstein
In August 2011, Butler was sentenced to five years in prison, a $250,000 forfeiture and a $5 million fine for securities fraud, conspiracy to commit securities fraud, conspiracy to commit wire fraud, and conspiracy to commit wire fraud in connection with failed auctions of non-student loan-based Auction Rate Securities (ARS) not listed on an American Exchange, which Butler and coconspirator Tzolov—corporate investment management employees at Credit Suisse’s Manhattan office—had initially sought to sell in August 2007. Email confirmations to clients falsely indicated that student loan ARS were bought when in fact, non-guaranteed collateral backed the securities. District court denied Butler 28 USC §2255 relief vacating conviction. It also denied him a new trial. The court rejected Hart’s claim that the government violated Brady and Giglio by failing to disclose exculpatory information that Butler interacted with clients—like Medis Technologies and Lumec—interested in investing in both student-loan and non-student loan-backed ADRs. Because the sale and purchase of the subject ARS’s were primarily domestic, §10(b) of the Securities Exchange Act applied. Thus Hart’s claim for relief based on a change of law was denied.
