Missing Wall Street Broker Charged in Alleged Subprime Scam Caught

A former Wall Street broker who became a fugitive after being charged in a securities fraud case has been captured in Spain, U.S. authorities said Wednesday.

Julian Tzolov had been the subject of an international manhunt since in early May, when he disappeared a few weeks before he was scheduled to go to trial in federal court in Brooklyn.

U.S. authorities said Spanish police caught the former broker for Credit Suisse's private banking division early Wednesday, but gave no further details. His attorney had no immediate comment.

It was unclear what impact the capture would have on the case, which was set for trial next week without Tzolov. A hearing was set for Thursday.

Tzolov, 36, and a former Credit Suisse colleague Eric Butler pleaded not guilty last year to securities fraud alleging they duped foreign corporate customers into believing that $1 billion in securities being purchased in their accounts were backed by federally guaranteed student loans.

In reality, the auction rate securities were backed by subprime mortgages, collateralized debt obligations and other high-risk investments, the authorities said. Because of their higher risk, they brought a higher yield and much larger commissions for the brokers.

Customers were stuck holding more than $800 million in securities that were not easily traded and lost their value when the market for the securities began to collapse in August 2007, according to the SEC.

Credit Suisse has said it notified authorities as soon as it became aware of the fraud, and is cooperating with the investigation. The defendants resigned in 2007.