Apparently, the trial of Bear Stearns hedge fund managers Ralph Cioffi and Michael Tannin is not going so well.  These are the fellows with the incriminating email trails, and the apparent habit of taking their money out of the funds as they started to go bad.  Only it turns out that this isn't quite the whole story:

At times, Judge Block has even argued the defense's case. For instance, when the prosecution tried to exclude from evidence an e-mail message from Mr. Cioffi that spoke of having a plan "to save" his limited partners in the fund, Judge Block said: "What's wrong with having a plan that saves his L.P.'s? It shows his state of mind, that he is still trying to actively salvage the day."

. . . So what's gone wrong? As a number of former prosecutors predicted, a case built on provocative e-mail excerpts, bereft of context, can teeter when witnesses appear in court to provide a backdrop, for example, or the surrounding context of a seemingly damning e-mail message excerpt is read before a jury.

Take the infamous "toast" e-mail from Mr. Tannin. On April 22, 2007, Mr. Tannin, in a message sent from his personal Gmail account to the personal account of Mr. Cioffi's wife, wrote that "the whole subprime market is toast."

But in that same e-mail, the entirety of which was read into the trial record this week, a more sympathetic personality emerged. To Mr. Cioffi, his former boss and co-defendant, Mr. Tannin wrote:

Every so often I worry a bit that because you have been so spectacularly successful so far in almost every way, you might be taking this opportunity to second guess yourself. Well, just in case you are, don't. At the end of the day, I think we will both be able to look at all that happened and all that we have done and learn from what has gone well as well as from what hasn't ... What a shame it would be for us to not take all we have learned and apply it going forward.

He continued:

We have lived a full and exciting life in the midst of an increasing [net asset value] and I see no reason why the fullness and positive excitement we experience should be any different if the trajectory of NAV changes. On every level I did not think a mature person or any person who is at peace with themselves would allow NAV to be the determining factor in anything except their W2 calculation, and Turbo Tax seems to do that effortlessly.

The testimony of George Buxton, a former Bear Stearns private client representative, or broker, also underscored how the addition of context can chip away at a case. In a pretrial interview with the government, Mr. Buxton, when told about Mr. Cioffi redeeming $2 million of his own money from one of the ailing funds, compared it to "the captain beating the women and children off the boat."

But on cross-examination by one of Mr. Cioffi's lawyers, it came out that when Mr. Buxton made the remark he had not yet been given an additional piece of information -- that Mr. Cioffi had taken the money out in order to reinvest it in another Bear Stearns fund. Mr. Buxton then testified that had he known about the transfer he would not have made the "boat" comment.

They still come off as arrogant and self-satisfied, in a way that helped get their clients (and us) into big trouble.  But these aren't crimes.

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