By - Apr 12, 2013
“Why did you do that?” U.S. District Judge Alvin Hellerstein asked Serageldin today in Manhattan federal court.
“To preserve my reputation in the bank at a time when there was great financial turmoil in the marketplace,” he said.
Serageldin, 39, pleaded guilty today to a single count of conspiracy to falsify Credit Suisse’s books and records, which carries a maximum prison sentence of five years. Serageldin is scheduled to be sentenced Aug. 2.
Under a plea agreement with the government, Serageldin agreed to forfeit $1 million as proceeds of the crime. Both sides agreed that federal sentencing guidelines, which aren’t binding on the judge, call for Serageldin to get from four years and nine months to five years in prison.
Sean Casey, Serageldin’s lawyer, declined to comment on his client’s guilty plea after the hearing today.
Boost BonusesProsecutors claimed Serageldin marked up the collateralized debt obligations to meet targets and boost year-end bonuses for his $5.35 billion trading book, which was known as “ABN1,” at a time when the U.S. housing market was plummeting. After the scheme was discovered, Credit Suisse took a $2.65 billion write- down, according to the government. About $540 million of the write-down was due to the ABN1 securities, according to the government.
Last year, two of Serageldin’s former subordinates, David Higgs and Salmaan Siddiqui, pleaded guilty to overstating the value of the mortgage-backed assets in ABN1 after the collapse of the U.S. housing market. Both said they acted at Serageldin’s direction and agreed to cooperate with prosecutors.
“While the real estate market was imploding and the financial crisis emerging, Kareem Serageldin and his co- conspirators concealed significant subprime mortgage-related losses in order to secure multimillion dollar paydays,” Manhattan U.S. Attorney Preet Bharara said in a statement today.
Employees FiredCredit Suisse, based in Zurich, fired all three employees in 2008 and cooperated with the U.S. government’s investigation.
Serageldin was arrested outside the U.S. consulate in London in September. He was taken into custody by the Federal Bureau of Investigation April 5 after he was extradited from the U.K. When charges were announced in February 2012, the U.S. said Serageldin was a U.S. citizen. He said in court today that he’s now a British citizen.
Serageldin was originally charged with falsifying books and records and wire fraud in addition to the conspiracy count.
“I made a terrible mistake and I deeply regret my conduct,” he told Hellerstein today.
The cases are U.S. v. Serageldin, 12-00090, U.S. v. Higgs, 12-cr-00088, and U.S. v. Siddiqui, 12-cr-00089, U.S. District Court, Southern District of New York (Manhattan).
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