(Source: Michael Sallah The Miami Herald) – For years Cliff Popper, financial wheeler dealer, pleaded in his defense that he was being made a scapegoat for the nation’s sub-prime loan crisis by ambitious regulators who failed at their jobs to police the volatile industry.
The charismatic South Florida trader, who rode the crest of the housing boom by popularizing risky investments in mortgage pools, defended himself at his federal civil fraud trial in November in West Palm Beach.
But before the judge could give his decision, Popper killed himself this week, his body found on Tuesday in his oceanfront condo in Highland Beach.
The death of the flashy broker who symbolized the nation’s mortgage craze is the latest chapter in the government’s case against him and others accused of wiping out the finances of people in investments that defined the country’s economic crisis: speculative mortgage-backed securities.
Lawyers for the U.S. Securities and Exchange Commission argued Popper was the architect of a program that misled people into pouring their life savings in investments that collapsed with the home market. In all, 1,000 people lost more than $100 million.
“It was a horror show,” said Scott Silver, a Coral Springs lawyer for more than 30 families in Broward County and Miami-Dade. “People lost homes, retirements, life savings. These were mom-and-pop investors.”
The case was made more prominent because of Popper, a well-known trader with expensive tastes who drove a BMW Z8, entertained clients in a sky box at Sun Life Stadium and owned a $2.4 million condo on South Beach.
Witnesses told lawyers searching for assets the 54-year-old trader spent thousands of dollars a week on escort services and flying in female porn stars from California. “He lived a rock star lifestyle,” said Silver.
While he held courtside seats at Miami Heat games and had his photo snapped with Shaquille O’Neal, Popper emerged as one of the country’s recognized experts on the high risk investments tied to sub-prime loans.
From offices in Coral Springs and Boca Raton, he and others on his team touted the investments on radio shows, newspaper ads and Internet sites.
A head trader for Brookstreet Investors — his 18th brokerage job in 25 years — Popper traveled the country coaching the firm’s brokers on how to sell the investments.
While Goldman Sachs bundled mortgage-backed securities for institutional investors, Popper was the guru who cut up smaller units to sell to retail customers. “He took it from Wall Street to Main Street,” Silver said.
In time, Popper’s investments soared in the housing boom: More than $300 million was invested while Popper and his team reaped commissions totaling $16.2 million in just three years, SEC records state.
But things began to unravel in June 2007 in the decline of the sub-prime loan market, followed by a dramatic drop in securities based on those loans. Some investors borrowed as much as 90 percent of their total investments.
Because of losses, Brookstreet wiped out its capital by making up shortfalls — forcing the firm to shut its doors in 2007, leaving 630 brokers out of work.
Not only did Popper lose his job, but was stripped of his broker’s license. Two years later, the SEC charged him and nine others with civil fraud, saying he and others lied and misrepresented the nature of the investments to convince people to turn over their money. In July 2009, he filed for bankruptcy.
“His personal life and his professional life were destroyed,” said Miami attorney Jeffrey Kaplan, who once represented Popper. “People thought he had hidden assets, but I just don’t believe it.”
Defense lawyers argued the SEC interviewed Popper in 2004 and 2006 about his controversial investments but didn’t charge him until 2009 — two years after the firm collapsed. “Where were the regulators when this was actually happening?” said Kaplan. Molly White, senior SEC counsel, declined to comment.
After standing trial in November, Popper — representing himself — wrote his final argument to the court, arguing he should never have been charged.
He said he “never made any intentional misrepresentations to anyone,” and his business was hit by market forces that also struck even bigger firms, like Bear Stearns and Lehman Brothers.
Over the past few weeks, he “was under a massive amount of personal stress,” said Kaplan. “I knew he wasn’t well. I talked to him about a month ago. But I had no idea he was going to 1/8commit suicide].”
Sometime between the weekend and Tuesday at 2:30 p.m., his body was found in his third-story condo — his death attributed to an apparent suicide, according to a Highland Beach police report. The Palm Beach County medical examiner’s office is conducting an autopsy.
It’s unclear when Federal Judge Kenneth Marra will rule in the case, but Silver said the damage created by the sale of the risky investments will be felt for years after the charges are resolved. “There are people who saved $500,000 for their retirement who are wiped out. They can’t retire,’’ he said.
“Sadly, it took 1/8the SEC3/8 years to file a case. They filed charges long after the fraud imploded on itself.”
©2012 The Miami Herald
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Source: Michael Sallah The Miami Herald