Two former Bear Stearns hedge fund managers are among the first to take the perp-walk to court for the huge sub-prime collapse. Let the fun begin.

Ralph Cioffi and Michael Tannin (pictured in middle)were indicted by a federal grand jury in Brooklyn today. At 7AM this morning, Cioffi was arrested at his suburban home in Tenafly, NJ, while Tannin was given the cuffs at his Manhattan apartment. 7 AM is a little early for an arrest, right? Do you think they got a chance to have breakfast and read today’s Wall Street Journal? Or that sweet comic book Portfolio did?

These two lovable chaps face charges of conspiracy, wire fraud, and securities fraud in trying to cover up the collapse of two major Bear Stearns hedge-funds back in the summer of 2007. Many people feel their collapse was the first sign of the sub-prime crisis that would ravage Wall Street and the economy for months. For further explanation check out the last 3 minutes of this little refresher video where these specific funds get reamed by the Brits.

According to a Bloomberg article which broke the news and provided these images, justice is on the way:

The two men were charged with misleading investors about the health of two Bear Stearns hedge funds whose implosion ignited the subprime mortgage crisis. Cioffi was also charged with insider trading in the indictment, which cites a series of e-mails between the two men. They face as much as 20 years in prison if convicted of the most serious charges.

I’d be seriously surprised if they got 20 years, but who knows, maybe they’ll get hyped up as scapegoats for all the country’s economic woes?

The justice department is on a roll today though, as they’ve also announced they have, to date, charged 400 people with crimes relating to mortgage fraud in the sub-prime crisis. These charges are a result of victims being scammed out of over $1 billion in predatory lending and foreclosure rip-offs.

No one is safe today as the lucky 400 include real estate agents, lawyers, lenders, appraisers and even some speculative borrowers.

Bloomberg news sure is busy today with the big arrest reports:

FBI Director Robert Mueller and Deputy Attorney General Mark Filip will announce the national crackdown, dubbed Operation Malicious Mortgage, this afternoon in Washington. Nearly 300 people have been arrested thus far in cities ranging from Chicago to Dallas to Miami, department officials said.

I like that name, “Operation Malicious Mortgage”. Maybe they’ll make a Tom Clancy novel out of it? Or better yet, a Rainbow Six/Splinter Cell game showing sniper soldiers taking out corrupt real estate agents all over the country. Pink mist ahoy!

We’ve waited a long time for some action from the government, but it’s still too early to tell if this is an adequate response to make up for everything that went down in sub-prime. It seems like a decent start, but they better keep ‘em coming.

Bloomberg: US Charges 400 In Mortgage Fraud, June 19, 2008

Bloomberg: Ex-Bear Stearns Fund Managers Indicted, June 19, 2008