Former top investment banker Kareem Serageldin, the highest-ranking executive to be charged for crimes tied to the mortgage meltdown, pleaded guilty yesterday to inflating the value of toxic mortgage assets.
As part of a deal with prosecutors, Serageldin, the ex-global head of Credit Suisse’s structured products group, pleaded guilty to one count of conspiracy, which carries a maximum five-year sentence.
“I made a terrible mistake and I deeply regret my conduct,” Serageldin told Manhattan federal Judge Alvin Hellerstein yesterday.
Serageldin blamed two employees for marking up the prices of subprime mortgage bonds, but said he went along with the scheme “to preserve my reputation within the bank at a time when there was a lot of financial turmoil.” His cohorts, David Higgs and Salmaan Siddiqui, have already pleaded guilty.
The 39-year-old Yale graduate was charged more than a year ago with hiding losses tied to the $3.5 billion mortgage portfolio in a bid to boost his bonus. Prior to striking a deal with prosecutors, he faced up to 45 years in prison on charges including conspiracy and fraud.
Serageldin also agreed to forfeit $1 million — the bulk of his $1.7 million bonus for 2007. He earned a total of $7 million that year, but $5.2 million was rescinded after the bank caught wind of the cover-up.
The scheme contributed to Credit Suisse’s $2.65 billion write-down in 2007. The bank was not charged with wrongdoing.
“He got a fat bonus and other incentives, and Credit Suisse incurred a massive write-down, a half-billion dollars of which was attributable to Serageldin’s scheme,” said FBI assistant director George Venizelos.
Serageldin, however, denied prosecutors’ claim that the scheme was carried out to boost his bonus. “That’s not my view of it,” he told the judge.
Serageldin was living in London at the time the charges were filed, resulting in his recent extradition to the US.