SEC Star Witness Says Tourre Misled Her on Paulson’s Role

By Bob Van Voris - Jul 23, 2013

The star witness in the Securities and Exchange Commission’s civil fraud case against Fabrice Tourre told jurors that Goldman Sachs Group Inc. misled her into helping construct a doomed investment that the Paulson & Co. hedge fund was betting would fail.

Laura Schwartz, who headed ACA Management LLC’s asset management business in early 2007, testified today that Goldman and Paulson, which is run by billionaire John Paulson, led her to believe that the hedge fund wanted to invest, rather than take a short position, in a mortgage-backed security that lost $1 billion in the crash of the credit markets.

“Our understanding was that Paulson was the equity investor,”