SEC lawyer to NY jury: Ignore trader's 'fantasy'

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Associated Press

Posted on July 30, 2013 at 10:33 AM

Updated Tuesday, Jul 30 at 1:02 PM

NEW YORK (AP) — A government lawyer said a former Goldman Sachs vice president tried to draw jurors into a "fantasy world" to fend off accusations that he violated securities laws, but a defense attorney countered that prosecutors had wrongfully accused his client in a case that grew from the collapse of the housing market six years ago.

The jury in Manhattan federal court was expected to begin deliberations Wednesday after a full day of summations in the civil case against Fabrice Tourre. The three-week trial stems from allegations the Securities and Exchange Commission made in 2010 against him and Goldman Sachs. It has been called the most significant legal action related to the mortgage securities crisis that helped push the country into recession.

SEC lawyer Matthew Martens told jurors that Tourre, who came to the United States from France in 2000 to study at Stanford University, used "lies and trickery and deceit" to dupe investors and jurors into believing that a package of securities based on subprime mortgages was built to be profitable.

Martens said Tourre hid the fact that the hedge fund Paulson & Co. Inc. and its billionaire president, John A. Paulson, were poised to make $1 billion if the mortgages that Paulson helped choose for the portfolio failed. He said Goldman Sachs also stood to make millions in fees and Tourre, who earned $1.7 million in 2007, could earn bonuses with the failure of the investment.

"We proved it just as we said we would," Martens said, citing documents that he said "can't tell lies."

He said witnesses can tell lies and "when it came to lies from the witness stand, Mr. Tourre took the cake." Tourre testified over three days that he did not intend to mislead anyone.

Martens called his testimony "surreal, imaginary, unreal, dreamlike" and said Tourre wanted jurors "to live in his imaginary land ... to live in a fantasy world."

"Only if you close your eyes to the facts," Martens said, "you can find Mr. Tourre not liable for his actions."

Tourre's attorney, John Coffey, said the government had "unjustly accused him of wrongdoing."

He urged jurors to see the investment's failure in perspective, noting that all similarly packaged securities "went off the cliff as well" after 2007.

In July 2010, Goldman Sachs settled charges and agreed to pay $550 million. The bank still faces private litigation.

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