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DistrictCourt for the Eastern District of New York (Brooklyn). (Reporting by Grant McCool, editing by Maureen Bavdek) Stocks. The ARS werecollateralized by subprime mortgages, not the government-backedstudent loans ordered by the clients, prosecutors said The case is USA v Tzolov and Butler 08-370 in U.S. Tzolov is in custody, and on Tuesday his attorney agreedto the judge revoking his bail. Credit Suisse said both men resigned in September 2007after the company suspended them for "prohibited activity." They were both released on bail secured by millions ofdollars in property, but Tzolov fled house arrest andelectronic monitoring in his New York apartment in May. The former colleagues, who helped run a cash managementunit for Credit Suisse corporate clients, are accused offraudulently trying to earn commissions worth millions ofdollars by purchasing $1 billion of risky ARS for clientaccounts and not telling the clients. Tzolov, a Bulgarian national, has also been charged withjumping bail and illegally obtaining a U.S permanent residencecard.

Thegovernment has said all along that it wanted to put the men ontrial together. The credit crisis put increasing pressure on the $330billion market until it froze in February 2008, leavinginvestors saddled with securities they could not sell. Jury selection in the trial of Butler, which was postponedby presiding Judge Jack Weinstein on Monday because Tzolov wasbeing brought back after two months on the run, will start onWednesday [ID:nN20500252]. Both Butler, 37, and Tzolov, 36, pleaded not guilty inSeptember to charges of securities fraud, conspiracy to commitsecurities fraud and conspiracy to commit wire fraud. Julian Tzolov and his former colleague Eric Butler wereindicted in New York last year in one of the first criminalprosecutions stemming from the 2007 credit crunch. They arecharged with fraudulently selling $1 billion worth ofmortgage-backed auction rate securities (ARS) to corporateclients. Tzolov, escorted by FBI agents back to the United States onMonday, was scheduled to appear Wednesday for a "Criminal CauseFor Pleading," according to the calendar for the U.S DistrictCourt in Brooklyn.

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