Defense Bears case

The defense lawyer for ex-Bear Stearns hedge-fund manager Ralph Cioffi yesterday promised to present documents and audio tapes that will cast doubt on federal prosecutors’ claim that Cioffi duped investors about the health of two collapsing hedge funds.

“I’m not here to tell you he was perfect,” said attorney Dane Butswinkas in his opening remarks in Brooklyn federal court. “But when you look at Ralph at the end of this case, you’re not going to see a criminal trying to perpetrate fraud.”

Butswinkas said that the evidence will show the situation surrounding the hedge funds’ failure was more nuanced and complex than prosecutors are claiming.

It marked the first time that Cioffi’s side offered up a hint of how he’ll fight the fraud charges stemming from claims he and cohort Matthew Tannin hid pivotal information about their funds’ health ahead of an implosion brought on by the mortgage crisis.

Tannin’s lawyer is expected to make her opening statement today.

Assistant US Attorney Patrick Sinclair in his opening remarks accused the pair of concealing the truth about the funds’ trouble from investors in order to protect multimillion-dollar bonuses they were in line to get. “They lied. They lied over and over again to lull those investors into a false sense of confidence,” Sinclair said.

The feds’ case also rests on documents and audio tapes, including one the government says shows Cioffi lying to investors about a large, pending withdrawal by an investor, Concord Management, which had $57 million in the funds.

Instead of warning investors about Concord’s potentially massive withdrawal, Cioffi described pending redemptions as a “couple of million” dollars during a conference call with investors.

Butswinkas countered that Cioffi was relying on a Bear Stearns document tabulating redemptions for all alternative funds. The document, which Butswinkas said he will present to jurors, failed to register the Concord redemption request.