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U.S. Drops Fraud Indictment of Analyst Contogouris


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U.S. Drops Fraud Indictment of Analyst Contogouris (Update2)

2009-07-22 15:53:21.353 GMT

 

 

    (Adds civil allegations in fifth paragraph.)

 

By David Voreacos and Thom Weidlich

    July 22 (Bloomberg) -- U.S. prosecutors dropped the 2007 fraud indictment of Spyro Contogouris, a freelance stock analyst accused of siphoning $2.5 million from real estate companies where he worked.

    A judge in New York yesterday granted a request by acting U.S. Attorney Lev Dassin to terminate the case. Contogouris was accused in a four-count indictment of lying to companies that hired him in 1995 to manage properties in New York and Houston and stealing their money.

    “Based on a review of the evidence in the case and information pertaining to this defendant acquired subsequent to the filing of the indictment, the government has concluded that further prosecution of Spyro Contogouris would not be in the interests of justice,” U.S. District Judge Barbara Jones wrote in an order in federal court in Manhattan.

    Contogouris, who was arrested in November 2006, was charged in a mail-fraud indictment in March 2007 with diverting tax payments to his personal accounts and siphoning tax refunds intended for the real estate companies.

    Separately, Contogouris, who has run a research consulting company called MI4 LP, is defending fraud allegations in a civil lawsuit brought by Toronto-based Fairfax Financial Holdings Ltd.

    Fairfax accused him of conspiring with SAC Capital Advisors LLC, Kynikos Associates Ltd. and other hedge funds to drive down its stock price by spreading lies about the company. The hedge funds denied wrongdoing.

 

                      Contogouris’s Lawyer

 

    Contogouris’s attorney James Felix didn’t immediately return a call seeking comment. A spokeswoman for Dassin, Yusill Scribner, declined to comment immediately on the dismissal.

    U.S. prosecutors in Manhattan have dropped criminal charges filed in recent years against other fraud defendants, including David Stockman, the former chief executive officer of Collins & Aikman Corp.; David Pinkerton, the former American International Group Inc. director; and five New York Stock Exchange specialists.

    The case is U.S. v. Contogouris, 07-cr-196, U.S. District Court, Southern District of New York (Manhattan).

 

For Related News and Information:

Financial crime stories: TNI FIN CRIME BN <GO> Top legal stories: TLAW <GO> Menu of Bloomberg legal resources: BLAW <GO>

 

--With assistance from David Glovin in New York. Editors:

Charles Carter, Glenn Holdcraft

 

To contact the reporters on this story:

David Voreacos in Newark, New Jersey,

at +1-973-286-0016 or dvoreacos@bloomberg.net; Thom Weidlich in Chicago at +1-312-427-5474 or tweidlich@bloomberg.net.

 

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Do we think they dropped the charges because:

 

A) There was no evidence or the guy he stole from decided not to testify

 

B) The prosecutors are "captured"

 

C) He is cooperating on some other case (this is obviously what I'm hoping for)

 

D) None of the above

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The potential damages on this action may be substantialy larger than anyone can imagine. American juries have a reputation of making VERY large awards if they feel one parties actions have been particularly egregious. If the rats start turning on each other it could get interesting you could even see a situation were one hedgie starts aggressively buying FFH and then offering to cut a deal . I will sing like a canary in exchange for immunity.

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Guest Broxburnboy

Methinks that in the absence of an unrelated fraud conviction, Contogouris's posture in the FFH civil suit is slightly

stronger. He won't have to rat out his bosses in the FFH action.

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