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Fabrice Tourre Guilty: 5 Fast Facts You Need To Know

Fabrice Tourre, guilty, fraud, investment

Fabrice Tourre, a former Goldman Sachs mortgage trader (Getty Images)

Fabrice Tourre, a former Goldman Sachs investment banker, has been found guilty in 6 of 7 charges in a $1 billion in collateralized debt obligation (CDO) fraud scheme during the lead up to the 2008 financial crisis.


1. Tourre Defrauded Investors Out Of $1 Billion

Tourre defrauded investors of $1 billion during the lead up to the 2008 financial crisis. He tricked investors into investing money in a mortgage deal that was secretly designed to fail, according to a Washington Post report. The Securities and Exchange Commission’s lead attorney, Matthew Martens claimed that Tourre greatly profited from the scheme and then tried to alter the narrative for the jury in order to stay out of trouble.

According to the same Washington Post report, Paulson & Co. hired Goldman Sachs to create a mortgage product that they could bet against the housing market in 2007. Martens and the SEC alleged in court that Tourre committed fraud by not telling some investors about Paulson’s strategy. He also did not inform them that Paulson picked securities that were included in the mortgage portfolio. These half-truths earned Goldman Sachs $1 billion off this scheme.

Tourre committed fraud using collateralized debt obligation, which is “a type of structured asset-backed security [that] can be thought of as a promise to pay investors in a prescribed sequence, based on the cash flow the CDO collects from the pool of bonds or other assets it owns.”

“Mr. Tourre was not some entry-level rookie,” Martens said. “He was all over this deal. … It was a $1 billion fraud to feed Wall Street greed.”


2. Tourre, nicknamed “fabulous Fab,” Is a Talented Math Wizz

Tourre, nicknamed “fabulous Fab,” is a talented and cunning math whiz. He is a French-born Stanford graduate who landed an entry-level job at Goldman Sachs, and at 28, put this deal together under the supervision of his superiors. Now, at 34, he has been found guilty of 6 of his 7 charges. According to the NY Daily News, “he faces potential fines and a possible ban from the financial industry.” The exact details of his punishments are pending a sentencing hearing.


3. Evidence Of Tourre’s Crime Surfaced in 2005 Phone Call Notes

Fabrice Tourre, court, testifies, fraud, goldman sachs

Fabrice Tourre testifies in court. (Getty Images)

The New York Times reported in 2009:

[Jonathan M.] Egol and Fabrice Tourre, a French trader at Goldman, were aggressive from the start in trying to make the assets in Abacus deals look better than they were, according to notes taken by a Wall Street investor during a phone call with Mr. Tourre and another Goldman employee in May 2005.


4. Goldman Sachs COO Does Not Believe Tourre Is Guilty

gary cohn, chief operating officer, coo, goldman sachs

Gary D. Cohn, President and Chief Operating Officer of Goldman Sachs Group (Getty Images)

In an interview with Kate Kelly on CNBC on July 31, Goldman Sachs COO Gary Cohn expressed that he does not believe Tourre is guilty of the charges.

KELLY: FABRICE TOURRE, ON TRIAL IN LOWER MANHATTAN. JURORS DELIBERATING RIGHT NOW. IS HE GUILTY OF MISLEADING INVESTORS AS A PART OF THAT COMPLEX SECURITY HE WAS A PART OF SEVERAL YEARS AGO?

COHN: WE DON’T BELIEVE SO, BUT, AS YOU SAID, THERE’S A JURY DELIBERATING.

KELLY: DO YOU HAVE ANY EXPECTATIONS ON THE OUTCOME?

COHN: OF COURSE I HAVE EXPECTATIONS.

KELLY: WELL YOU DON’T BELIEVE HE’S GUILTY, BUT I’M WONDERING WHAT THE JURY WILL SAY. HAVE YOU FOLLOWED THE TRIAL?

COHN: I’VE FOLLOWED THE TRIAL, YES.

KELLY: AND YOU’RE NOT GOING TO GO FURTHER ON THAT ONE?

COHN: I FOLLOWED THE TRIAL.


5. Tourre Has The Support of French President Sarkozy

Fabrice Tourre, facebook, Sarkozy

A screen capture taken from Fabrice Tourre’s Facebook page.

Fabrice Tourre has the support of French President Sarkozy, according to a Facebook post on Tourre’s profile. The post (view above) from May 2010 translates to “Thank you to President Sarkozy for his support.” This begs the question on whether Sarkozy will address Tourre’s conviction.

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