A former Jefferies Co. managing director convicted of fraud for lying to customers about the price of mortgage-backed securities sued the AllianceBernstein Holding LP executive who reported him.
Jesse C. Litvak sued Michael Canter, head of the securitized assets group at New York-based AllianceBernstein, in New York State Supreme Court in Manhattan yesterday, accusing him of using “wrongful, unfair or improper means” to interfere with his employment, directly resulting in his termination.
Litvak was accused of defrauding investors of $2 million by misrepresenting how much sellers were asking for the securities, or what customers would pay, and keeping the difference for Jefferies.
Prosecutors said during Litvak’s trial that the alleged fraud came to light in November 2011 when Canter received an e- mail from a Jefferies colleague that mistakenly contained a spreadsheet detailing a history of bond trading at the firm.
Canter testified for the prosecution during the case, saying the spreadsheet showed that Litvak had misled him about how much Jefferies had paid for bonds, including one instance when Canter agreed to raise a bid, yet the firm still paid the original price.
Litvak was found guilty in March of securities fraud and making false statements, as well as fraud connected to the Troubled Asset Relief Program. Along with his prison sentence, he was ordered to pay a $1.75 million fine.
He had been scheduled to report to prison Nov. 5 to begin serving a two-year sentence before the U.S. Court of Appeals in Manhattan last month granted him bail while he challenges his conviction. The appeals court said he raised “substantial” questions of law and fact that are likely to result in a reversal.
Jonathan Sack, an attorney representing Litvak, and Jonathan Freedman, a spokesman for AllianceBernstein in New York, didn’t immediately respond to messages seeking comment on the lawsuit. Canter also didn’t immediately respond to a phone message.
The case is Litvak v. Canter, 653890/2014, New York State Supreme Court, New York County (Manhattan).