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Posted: Jul 17 2009, 12:55 PM
Member No.: 4,044
Joined: 30-April 09
July 17, 2009
Ex-Credit Suisse broker arrested after manhunt
Graham Keeley in Barcelona
Spanish police have arrested a former Credit Suisse broker who has been accused perpetrating of a $400 million fraud in the US.
Julian Tzolov, 36, a former vice-president of the Swiss bank’s New York office, was detained in Marbella after jumping bail in America.
Mr Tzolov had been under house arrest in New York when he went on the run on May 9, sparking an international manhunt.
After a tip-off from the Federal Bureau of Investigation, Spanish police detained Mr Tzolov at the upmarket resort city in Andalucia on Wednesday.
Members of the Spanish National Police’s fugitive unit captured Mr Tzolov as he and a bodyguard stopped the Citroen Saxo they were travelling in at a petrol station.
Mr Tzolov was using false documents bearing the name Ivan Stefanov Ivanov.
He was staying with friends from the Bulgarian community in the region although he was seeking rental accommodation priced as high as $7,500 a month, a police spokesman said.
Mr Tzolov and Eric Butler, 37, a former Credit Suisse broker, are accused of falsely telling clients their financial products were backed by federally guaranteed student loans while they were actually linked to auction-rate securities.
The pair allegedly persuaded investors to part with large sums of money over a series of years.
The funds were then invested in high-risk assets including sub-prime mortgages.
When the alleged fraud was discovered, investors were left with losses totalling $400 million.
The alleged fraud “foisted more than $1 billion in sub prime-related securities” on customers, the US Securities and Exchange Commission said when the two men were first accused last September.
Mr Tzolov had been based in Marbella for just over two months when he was arrested.
Spanish police said that he had been exploring ways to buy property.
Extradition proceedings would now begin in Madrid and probably take at least 40 days, Spanish authorities said.
Spanish police had been aware of Mr Tzolov’s presence in the area for about 10 days and a team of as many as 30 officers was searching for the former broker.
Mr Tzolov had told a New York court through his lawyer in April that he intended to plead guilty and avoid a trial.
The fraud trial of Mr Butler will start next week, regardless of the delay in returning Mr Tzolov to the US from Spain, a judge ruled.
“The trial against Eric Butler will proceed as scheduled on Monday,” US District Judge Jack Weinstein said at a hearing earlier this week.
David Walker, a Credit Suisse spokesman, said the bank was co-operating with prosecutors.
“In 2007 we informed our regulators of the defendant’s prohibited activity,” he said. “Since then we have assisted authorities in their investigation and we continue to do so.”
Mr Tzolov and Mr Butler face up to 33 years and nine months in prison if convicted, according to prosecutors. Each could be fined as much as $5 million.