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Prosecutors Present Evidence of Fraud in Cioffi Case

New York Times – Ahead of a scheduled trial next month, prosecutors have identified “direct evidence” that they say shows a former hedge fund manager, Ralph Cioffi, used his investment in a fund he controlled to obtain a $4.2 million line of credit for a Florida real estate project.

In a series of filings in Federal District Court in Brooklyn last week, prosecutors said Mr. Cioffi fraudulently pledged assets in the hedge fund he ran as collateral for a real estate loan from Busey Bank. Executives at Bear Stearns Asset Management, the division that housed the fund, told prosecutors they denied Mr. Cioffi’s request to pledge part of his assets for the loan because it could create a conflict of interest with other clients in the fund.

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