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As these pixels have had prior cause to note, the most predictable thing about a good hedge fund fraud is that it will be the gift that keeps on giving. Some of Jamie Dimon’s $6.5 billion in Bear Stearns’ (BSC) legal reserves is on the line in New York this month, as the Manhattan Investment Fund bankruptcy trustee takes another run at mitigating by litigating the $400 million or so incinerated by Michael Berger in the late 1990s.

The case has become something of a cause célèbre in securities law circles because of its potential for putting brokers on the hook for damages should they fail to adequately investigate suspicions that a client is, among other things, making stuff up. Already in the court system since 2001, it will be around for a while longer, regardless of the outcome of the current trial, as the losing side will almost certainly chase it to the end of the appeals process.

And Berger? He jumped bail before sentencing in Mar. 2002 and was finally arrested in his more-or-less native Austria in Jul. 2007. Last word, and it’s a while ago, was that he is rotting in some Austrian dungeon, awaiting trial on charges of defrauding his Austrian clients, including the Bank of Austria.

Hedge Fund Claim Made Sense, Ex-Bear Executive Says
by Tiffany Kary
Bloomberg Jun. 17 2008 

Source: Berger Case Back in Court