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On April 26, 2017, Judge Janet C. Hall of the United States District Court for the District of Connecticut sentenced Jesse Litvak, a former bond trader, to two years’ imprisonment, a $2 million fine, and three years’ probation after he was convicted in January 2017 of one count of securities fraud. United States v. Litvak, D. Conn., 3:13-Cr-19, Sentencing Minutes (Apr. 26, 2017). This sentence is the latest chapter in a multi-year saga for Jesse Litvak. (See Shearman & Sterling LLP, Bond Trader Acquitted Of All But One Securities Fraud Charges In Retrial, Need-to-Know Litigation Weekly, January 1, 2017).
Yet, despite an almost across-the-board acquittal at re-trial and the Second Circuit’s dismissal of five counts of his initial conviction, Litvak received the same term of imprisonment that the District Court had imposed after his initial conviction and a fine that was $250,000 higher than what Litvak initially received. SeeUnited States v. Litvak, D. Conn., 3:13-Cr-19, Sentencing Minutes (Apr. 26, 2017). Notably, the statutory maximum for securities fraud is 20 years of imprisonment or a $5,000,000 fine, or both. According to the Government’s calculation, the sentence called for by the federal sentencing guidelines was 9 to 11 years imprisonment and a $15,000 to $5,000,000 fine. At re-sentencing, the District Court did not endorse the defense arguments for leniency based on the jury’s mixed verdict, nor did it accept that a non-custodial sentence was appropriate due to the nature and circumstances of the offense, which historically has been addressed with administrative or regulatory punishments. At the same time, the District Court declined the Government’s argument that a substantially higher sentence was appropriate based on Litvak’s apparent lack of remorse. In support of its argument, the Government presented the District Court with communications between Litvak and a friend, in which Litvak declared “victory” after his 2014 sentencing, and noted (in connection with his successful appeal) that it was “great to be in front of smart judges, not dumb juries.” The Government also presented evidence that Litvak had announced (through a formal filing and statements to the press) his intention to sue a key witness who testified against him during his first trial. The suit was later withdrawn, after concerns were raised that Litvak’s filing of the suit may amount to a potential violation of Litvak’s bail pending appeal.
For now, Litvak’s sentence puts a close to the latest phase of this hotly contested criminal case. In the event Litvak pursues an appeal, the Second Circuit may get an opportunity to scrutinize the sole count of conviction. Yet, at sentencing, Judge Hall emphasized the root of the conduct that led the Government to pursue charges and which the Second Circuit focused upon in declining to reverse and dismiss all counts of Litvak’s conviction: “Your victims were harmed by your lies. They would not have paid you what they paid if you told the truth. You did what you did to make more money for yourself.” Despite the mixed verdict, the conviction and sentence will likely not deter aggressive prosecutors from investigating and prosecuting similar forms of conduct. Indeed, in a statement after the conviction, the U.S. Attorney for the District of Connecticut said that Litvak’s prosecutions “have acted as a forceful disincentive to market participants tempted to commit securities fraud.”