BoA Sues Previously Indicted Bear Stearns Hedge Fund Managers

October 31, 2008 ( - Ralph Cioffi and Matthew Tannin, two former Bear Stearns hedge fund managers who were indicted on conspiracy and fraud counts in June, are now being sued by Bank of America.

Cioffi, Tannin, and a third Bear Stearns exec, Raymond McGarrigal, are accused by the bank of hiding the funds’ poor health in order to the draw the bank into a complicated $4 billion transaction in which mortgage-backed securities controlled by the funds were pooled to support the sale of other securities, according to The American Lawyer. The complaint repeats many of the allegations against Cioffi previously presented (See Bear Stearns Hedge Fund Managers Arrested for Fraud ).

The American Lawyer said that according to the suit, Cioffi allegedly told a Bear Stearns economist in March 2007, “Don’t talk about [the funds’ February results] to anyone or I’ll shoot you.”

While these messages continued internally throughout the spring, Bank of America was agreeing to take on about $2.9 billion collateral to finance the $4 billion securitization, the complaint says. That collateral became worthless when the funds collapsed in June.

The third ex-Bear Stearns executive named, McGarrigal, now works at JPMorgan Chase, according to the news report.