Indicted former Bear Stearns hedge-fund manager Ralph Cioffi has used his homes in New Jersey and Naples, Fla. to secure a $4 million bond, but did not use his toniest address in Southampton to gain his freedom pending trial.
Public records show that Cioffi bought the 2.5-acre Hampton estate for $10.7 million in the best part of town in February 2007 – as his funds were already starting to collapse.
The 6,500-square foot shingle-style home has six bedrooms, seven baths, a pool and tennis court – plus a separate guesthouse.
According to the federal indictment, Cioffi told hedge-fund co-conspirator Matthew Tannin on March 3, 2007, that “subprime losses will be far worse than anything people have modeled.” That was just weeks after he closed on his luxurious house – just down the road from “Old Trees,” the $41 million estate that his former Bear Stearns colleague John Paulson purchased last April.
Cioffi and Tannin were arrested on securities fraud and conspiracy charges last week following a federal probe into the collapse of two subprime funds they controlled. The funds’ collapse fueled the demise of Bear Stearns and the present credit crisis.
In April, Tannin warned Cioffi in an e-mail that the funds could be “toast” while both were still promoting them to investors as an “awesome opportunity.”
The two men face maximum sentences of 20 years of imprisonment if convicted of securities fraud, and a maximum sentence of five years for conspiracy.