Report: Spitzer to Take another Shot at Sihpol Trial

July 7, 2005 ( - New York state Attorney General Eliot Spitzer has reportedly decided to retry former Bank of America Corp. broker Theodore Sihpol, who was acquitted last month of improper mutual fund trading for a hedge fund client.

Sihpol defense lawyer Paul Shechtman told reporters Thursday that Spitzer intends to retry Sihpol on the four counts on which a New York state jury deadlocked, Reuters reported.  The new trial is slated to begin August 22 and last four to five weeks.  Sihpol faces up to four years in prison on each of the remaining counts. Jurors were unable to reach a verdict on one count each of fraud and scheming to defraud and two counts of falsifying business records.

However, the jury had acquitted Sihpol of seven counts of grand larceny and 22 other counts, following a trial that lasted nearly six weeks and included six days of deliberations in what was widely viewed as a stinging Spitzer defeat (See  Empire State Jury Clears Sihpol of Scandal-Related Charges ).

In a separate statement Thursday, Sihpol attorney Barry Felder blasted Spitzer.  “The Attorney General, after being handed an overwhelming loss, seems intent on spending even more taxpayer dollars to criminalize behavior that has never been considered criminal, ” Felder charged.  “Ted Sihpol has been vindicated once, and we are confident that yet another jury will vindicate him again, despite Mr. Spitzer’s extraordinary efforts to prosecute him.”

During the proceedings, prosecutors accused Sihpol of helping the Canary Capital Partners LLC hedge fund trade mutual funds in late trading transactions.  Sihpol’s lawyers had argued that their client at the time thought Canary’s trades were proper, made no attempt to conceal them, and had no criminal intent.

The Charlotte, North Carolina-based bank agreed to pay $675 million to settle regulatory charges over its mutual fund practices, and Canary settled with Spitzer for $40 million.

Potential Prudential Charges

Spitzer’s decision to retry Sihpol comes as federal prosecutors in Massachusetts are nearing a decision on whether to indict three former Prudential Financial brokers for their role in the mutual fund scandal (See  Prudential Securities Charged with Late Trading  ).

Michael Sullivan, the US attorney in Massachusetts, is expected to make a decision on whether to indict Martin Druffner, Skifter Ajro and Justin Ficken by August 2, according to news reports.