NEW YORK — Attempts to place blame for the great financial crisis that sent the economy into a nose dive last year have made household names of top executives such as Angelo R. Mozilo, Richard Fuld and Maurice "Hank" Greenberg.
But the only major criminal case to emerge thus far from the global cataclysm involves two lesser-known hedge fund managers who will be thrust into the spotlight today when their trial begins with jury selection in a Brooklyn courtroom.
Federal prosecutors allege that former Bear Stearns Cos. fund managers Ralph Cioffi and Matthew Tannin -- in a frantic, eventually unsuccessful scramble in mid-2007 to keep their mortgage bond funds from collapsing -- misled investors about the deepening woes in the portfolios.
"Rightly or wrongly, they've become the poster children for all of the alleged misconduct on Wall Street that led to the economic meltdown," said Robert Mintz, a former federal prosecutor now in private practice in New Jersey.
Well before the startling demise 13 months ago of Lehman Bros. Holdings Inc., led by Fuld, the failure of the Bear Stearns funds was among the first dominoes to fall in the epic mortgage meltdown.
Bear, one of Wall Street's five leading investment banks, played a major role in the subprime mortgage mania that turned into a meltdown, leading to the global financial crisis. Bear turned subprime loans into securities that were gobbled up by investors -- including its own ill-fated funds.
The two funds spit out steady profits until the subprime market began cracking in early 2007. The collapse of the funds in July 2007 cost investors $1.4 billion and helped spark the demise of Bear Stearns, which was later sold at a fire-sale price to JPMorgan Chase & Co. in a deal arranged by the government.
The funds' implosion sent shudders through Wall Street as investors suddenly questioned whether time bombs were lurking at other investment banks.
"Lehman was the second shoe to drop," said Frank Partnoy, a professor at the University of San Diego School of Law. "Bear Stearns was the first."
To be sure, the boldface names of Wall Street still could be charged criminally.
The FBI is investigating Calabasas-based Countrywide Financial Corp., which Mozilo ran before it was sold last year to Bank of America Corp.
Federal authorities reportedly have subpoenaed Fuld as part of a probe into Lehman, where he was chief executive. And Greenberg, who ran the now widely reviled insurer American International Group Inc., reportedly is under criminal investigation.
Some experts, though, doubt that criminal charges ever will be brought against them.
"These cases are elusive because it's not clear there was any crime committed by CEOs or high-level executives in banking and mortgage companies," said John Hueston, a partner at Irell & Manella in Los Angeles who was a lead prosecutor in government cases against executives at defunct energy trading giant Enron Corp.
That would seem to leave Cioffi and Tannin as the unlikely fall guys for the financial fiasco.
Cioffi and Tannin are charged with securities fraud, wire fraud and conspiracy. Cioffi also is charged with insider trading. Each man could face a maximum sentence of 20 years. Lawyers for Cioffi didn't return a call seeking comment, and a spokesman for Tannin declined to comment. The defendants have denied the charges.
Prosecutors are expected to build their case on a series of e-mails in which the defendants privately despaired over their troubled funds even as they kept touting them to investors.
"The subprime market looks pretty damn ugly," Tannin panicked in one message to Cioffi. "There is simply no way for us to make money -- ever."
Parading e-mails before jurors has worked in the last decade in such prominent Wall Street trials as those of Martha Stewart and Tyco International's Dennis Kozlowski. The basic idea is to let defendants hang themselves with their own seemingly irrefutable words.
Two days after Tannin's e-mail, the men told their bosses they were confident about the health of the funds, according to government court filings. And in a call with investors a day after that, Tannin said "there's no basis for thinking this is one big disaster."
Last Thursday, prosecutors submitted new e-mails to U.S. District Judge Frederic Block in which Tannin allegedly expressed concern about the funds' "blow-up risk" in November 2006.
The e-mails make for a convincing case, some experts say.
"It's an uphill battle to persuade a jury that you didn't mean what you said" in the e-mails, said Jim Becker, a former prosecutor now at Buchanan Ingersoll & Rooney in Philadelphia.
The defense is considered likely to play up the idea that their clients are being made scapegoats for a financial maelstrom that no one -- including former Federal Reserve Chairman Alan Greenspan and billionaire investor Warren Buffett -- saw coming.