EFTA00722107

Case: 3:09-cv-00106 
Document #: 1 
Filed: 08105,2009 
Page 1 of 19 
IN THE DISTRICT COURT OF THE VIRGIN ISLANDS 
DIVISION OF ST. THOMAS AND ST. JOHN 
FINANCIAL TRUST COMPANY, INC., 
Plaintiff, 
) 
) 
) 
) 
) 
vs. 
) 
) 
THE BEAR STEARNS COMPANIES INC. 
) 
JURY TRIAL DEMANDED 
) 
Defendant. 
) 
 
) 
CIVIL NO. 2009/106 
ACTION FOR DAMAGES 
VERIFIED COMPLAINT 
COMES NOW the Plaintiff, Financial Trust Company, Inc. ("Financial Trust"), by 
and through its undersigned counsel, and for its Verified Complaint against Defendant, 
The Bear Stearns Companies Inc. ("Bear Stearns"), alleges as follows: 
1. 
Financial Trust was at all relevant times herein a corporation incorporated 
under the laws of the Virgin Islands with its principal place of business in the Virgin 
Islands. 
2. 
Bear Stearns was at all relevant times herein a Delaware corporation with 
its principal place of business in the State of New York. On June 2, 2008, JP Morgan 
Chase & Co. ("JP Morgan") completed its acquisition of Bear Stearns making Bear 
Stearns a wholly owned subsidiary of JP Morgan. 
3. 
This Court has subject matter jurisdiction over this action pursuant to 28 
U.S.C. Section 1332(a) based on diversity of citizenship and because the amount in 
controversy exceeds $75,000.00, exclusive of interest and costs. 
EFTA00722107

Case: 3:09-cv-00106 
Document #: 1 
Filed: 08/05/2009 
Page 2 of 19 
Financial Trust Company, Inc. vs. The Bear Stearns Companies Inc. 
Verified Complaint 
Page 2 
4. 
Venue is proper in this District under 28 U.S.C. Section 1391 because a 
substantial part of the acts and omissions giving rise to the Verified Complaint were 
committed or occurred in this District. 
5. 
Financial Trust was at all relevant times herein engaged in the business of 
providing financial and business consulting services, and in connection therewith, 
makes investments in securities and other investments, which it reasonably expects to 
be profitable and appropriate. 
6. 
Jeffrey Epstein ("Epstein"), a Virgin Islands resident, was at all relevant 
times herein the president, a director, and the sole shareholder of Financial Trust. 
Epstein has had a relationship with Bear Steams beginning in 1976. Since 1981, Epstein 
has conducted hundreds of millions of dollars in transactions with Bear Steams for his 
own, as well as his clients', accounts and he conducted this business with the senior 
management of Bear Stearns. 
7. 
At or about the time of the events in question, Financial Trust owned and 
held 120,000 shares of Bear Steams stock in a brokerage account maintained at Merrill 
Lynch, Account No. 5AX-07000 (the "Merrill Lynch Account"). 
8. 
Epstein was at all relevant times herein the principal of Financial Trust 
with sole responsibility for the initial investment analysis, purchase decisions, ongoing 
financial analysis and sale decisions relating to Bear Stearns stock. 
9. 
James Cayne ("Cayne") was the Chief Executive Officer of Bear Steams 
from 1993 until January 2008 and Chairman of the Board from 2001 until Bear Steams' 
collapse in March, 2008. 
10. 
Warren Spector ("Spector") was Co-President and Co-Chief Operating 
Officer of Bear Stearns from 2001 until August 2007. Spector was forced to resign these 
EFTA00722108

Case: 3:09-cv-00106 
Document #: 1 
Filed: 08/05/2009 
Page 3 of 19 
Financial Trust Company, Inc. vs. The Bear Stearns Companies Inc. 
Verified Complaint 
Page 3 
positions in August 2007, but remained Senior Managing Director of Bear Steams until 
December 28, 2007. 
11. 
Samuel Molinaro ("Molinaro") was Chief Financial Officer of Bear Steams 
at all relevant times herein. He became CFO in October 1996. He became Executive Vice 
President of Bear Steams in December 2001 and Chief Operating Officer in August 2007. 
12. 
Alan Schwartz ("Schwartz") became Co-President and Co-COO of Bear 
Steams on June 25, 2001. He was named the President of Bear Steams on August 5, 2007 
and became the Chief Executive Officer on January 9, 2008. 
13. 
Alan Greenberg ("Greenberg") was a director of Bear Stearns at all 
relevant times herein. He was Chairman of the Board from 1985 to 2001, CEO from 1978 
to 1993 and served as Chairman of the Executive Committee at the time of Bear Steams' 
collapse in March 2008. 
14. 
The actions and omissions by all of Bear Stearns' agents and employees 
and the knowledge of all of Bear Steams' agents and employees are imputed to Bear 
Stearns under the doctrine of respondeat superior. 
15. 
Bear Steams and its agents fraudulently overstated the value of Bear 
Stearns' mortgages, mortgage-backed and asset-backed securities and other derivative 
financial instruments, the adequacy of its liquidity and capital reserves, and the quality 
of Bear Steams' risk management with the intent of inducing Financial Trust to retain 
the shares of Bear Steams held in the Merrill Lynch Account, which Financial Trust did 
until Bear Stearns' collapse in March 2008. 
16. 
Bear Steams sought to induce Financial Trust to retain its Bear Steams 
stock because, among other reasons, Bear Stearns knew that other large investors would 
view Financial Trust's sale of a significant block of shares of Bear Steams stock as a loss 
EFTA00722109

Case: 3:09-cv-00106 
Document #: 1 
Filed: 08/05/2009 
Page 4 of 19 
Financial Trust Company, Inc. vs. The Bear Stearns Companies Inc. 
Verified Complaint 
Page 4 
of confidence in Bear Steams by a company owned and managed by a person seen by 
such large investors as close to the firm. This would undermine confidence in Bear 
Stearns' management at a critical time when Bear Stearns' liquidity and Bear Steams' 
valuation of its assets were being investigated by the press, including Landon Thomas 
at the New York Times, following the collapse of two Bear Stearns hedge funds, the 
Bear Steams High-Grade Structured Credit Strategies Fund ("the "High-Grade Fund") 
and the Bear Stearns High-Grade Structured Credit Strategies Leverage Fund ("the 
Enhanced Fund") (collectively "the Hedge Funds"), in the summer of 2007. 
17. 
Because Financial Trust was a major, long-time investor in Bear Stearns, 
Epstein regularly communicated directly with the most senior management of Bear 
Steams. 
18. 
Bear Stearns knew that Financial Trust would not retain shares of Bear 
Stearns stock if Bear Stearns accurately, honestly and completely described Bear 
Steams' true financial condition and the failed processes of Bear Steams' risk 
management in the area of mortgage-backed securities. For example, Bear Steams knew 
that if Financial Trust and Epstein concluded that Bear Stearns' capital base was 
materially overstated due to Bear Steams' failure to properly mark to market its assets 
(failure to value securities at fair market value), and that Bear Stearns' liquidity and 
capital reserves were insufficient, Financial Trust would sell its shares of Bear Steams 
stock. 
19. 
The late disclosure of the true value of Bear Stearns' assets and the 
insufficiency of Bear Steams' liquidity and capital reserves resulted in Bear Steams' 
ultimate collapse and the precipitous decline of Bear Steams stock price, thereby 
injuring Financial Trust. On Monday, March 17, 2008, Bear Stearns shares fell to as low 
EFTA00722110

Case: 3:09-cv-00106 
Document #: 1 
Filed: OW05/2009 
Page 5 of 19 
Financial Trust Company, Inc. vs. The Bear Stearns Companies Inc. 
Verified Complaint 
Page 5 
as $2.84 per share following the announcement by JP Morgan that it had reached an 
agreement to purchase Bear Stearns for $2.00 per share. Bear Stearns was successful in 
untruthfully manipulating Financial Trust to retain its shares until it collapsed in 
March, 2008. 
20. 
Financial Trust sold 20,000 Bear Stearns shares, held in the Merrill Lynch 
Account, on or about March 14, 2008 for a severely reduced price of $34.9876 per share, 
and sold 100,000 shares held in the Merrill Lynch Account, on or about March 17, 2008 
for the sacrifice price of $3.4095 per share. 
21. 
Bear Stearns' false and misleading material misrepresentations and 
omissions, in oral conversations and meetings which Epstein had with the highest 
levels of Bear Steams' senior management, and in SEC filings and Bear Steams' investor 
conference video presentations and press releases which Epstein read, viewed, and 
relied upon, caused Financial Trust substantial losses. Financial Trust was injured by 
Bear Stearns' misrepresentations and omissions that fraudulently and negligently 
overstated the value of Bear Stearns' assets and therefore its capital base and concealed 
Bear Stearns' liquidity problems and insufficient capital reserves and its vulnerability to 
market circumstances. When these facts were disclosed, the value of Bear Stearns stock 
fell drastically, resulting in injury to Financial Trust. 
22. 
Bear Stearns' capital base as affected by its retained mortgages, mortgage-
backed and asset-backed securities and its ability to "repo" its securities (short term or 
overnight borrowings secured by various assets on the balance sheet) was critical to 
Epstein's evaluation when Bear Stearns experienced difficulties with its future revenue 
stream beginning in 2006. 
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Case: 3:09-cv-00106 
Document #: 1 
Filed: 08/05/2009 
Page 6 of 19 
Financial Trust Company, Inc. vs. The Bear Stearns Companies Inc. 
Verified Complaint 
Page 6 
23. 
In conducting ongoing financial analysis of the company, Epstein relied 
on Bear Stearns' publicly filed financial statements, as well as personal discussions with 
Bear Steams' senior management, including Cayne and Greenberg, concerning, without 
limitation, Bear Steams' liquidity and capital reserves, accounting policies and 
valuation procedures. 
24. 
Bear Steams had a capital base consisting of a concentration of assets in 
mortgages and mortgage-backed securities. Mortgages, mortgage-backed and other 
asset-backed securities and other derivative financial instruments held by Bear Steams 
were a major slice of the Bear Steams capital base pie: 
• 
According to its 2004 10-K, Bear Steams reported that it held $27.679 
billion in mortgages, mortgage—backed and other asset-backed securities and 
$12.711 billion in other derivative financial instruments. 
• 
According to its 2005 10-K, Bear Steams reported that it held $40.297 
billion in mortgages, mortgage-backed and other asset-backed securities and 
$12.957 billion in other derivative financial instruments. 
• 
According to its 2006 10-K, Bear Steams reported that it held $43.266 
billion in mortgages, mortgage-backed and other asset-backed securities and 
$11.617 billion in other derivative financial instruments. 
• 
According to its 2007 10-K, Bear Steams reported that it held $46.141 
billion in mortgages, mortgage-backed and other asset-backed securities and 
$19.725 billion in other derivative financial instruments. 
25. 
By August 2006, a significant downtown in the housing market was being 
experienced across the country. Consequently, default rates on subprime mortgages 
began to rise. 
EFTA00722112

Case: 3:09-cv-00106 
Document #: 1 
Filed: 08/05/2009 
Page 7 of 19 
Financial Trust Company, Inc. vs. The Bear Stearns Companies Inc. 
Verified Complaint 
Page 7 
26. 
Because of Bear Steams' substantial exposure to the U.S. residential 
mortgage market, Epstein became concerned the downturn in the housing market and 
the rising defaults in the subprime markets would have an outsized effect on Bear 
Steams' ability to borrow in the repo market. Beginning in the summer of 2006 and 
continuing through 2007 and the beginning of 2008, Epstein had numerous telephone 
conversations about such matters with Cayne or Greenberg, during which telephone 
calls Epstein received repeated false and misleading assurances from Cayne and 
Greenberg regarding Bear Stearns' unimpaired access to funds in the repo market 
27. 
Bear Steams and its agents repeatedly materially misrepresented the value 
of Bear Steams' assets as well as its processes to calculate value in Bear Stearns' public 
financial statements and made false and misleading misrepresentations and omissions 
in these statements. 
28. 
Epstein 
read 
the 
false, 
misleading, 
incomplete and 
material 
representations in Bear Stearns' financial statements as it was Epstein's practice to read 
all of Bear Steams' Form 10-K and Form 10-Q filings with the SEC and he reasonably 
relied upon these representations, in addition to the confirmation of financial stability 
that he received from Bear Stearns' senior management, in Epstein's analysis of Bear 
Steams in deciding whether Financial Trust should retain its shares of Bear Stearns 
stock which Financial Trust did to its economic detriment. 
29. 
Bear Steams' false and misleading material misrepresentations in SEC 
filings, which Epstein read and relied upon, include, but are not limited to, the 
following: 
(a) 
Bear Steams' 2006 10-K representations that the public filing disclosed the 
"fair value" of Bear Steams' holdings and obligations regarding 
EFTA00722113

Case: 3:09-cv-00106 
Document #: 1 
Filed: 08/05/2009 
Page 8 of 19 
Financial Trust Company, Inc. vs. The Bear Stearns Companies Inc. 
Verified Complaint 
Pa e 8 
mortgages, mortgage-backed and asset-backed securities and other 
derivative financial instruments, that Bear Stearns marked "its financial 
instruments owned to fair value on a daily basis", that Bear Steams 
compared its "model-based valuations with counterparties in conjunction 
with collateral exchange agreements"; and that Bear Stearns "regularly 
evaluate[d] and enhance[d]" its Value at Risk models "in an effort to more 
accurately measure risk of loss"; 
(b) 
Bear Stearns' second quarter 2007 10-Q's representation that Bear Stearns 
"regularly evaluate[d] and enhance[d]" its Value at Risk models "in an 
effort to more accurately measure risk of loss"; 
(c) 
Bear Steams' third-quarter 2007 10-Q's representations that Bear Steams 
"regularly evaluate[d] and enhance[d]" its Value at Risk models "in an 
effort to more accurately measure risk of loss" and that the current market 
value of Bear Stearns' retained mortgages, mortgage-backed and asset-
backed securities was $55.936 billion and that the current market value of 
its other retained derivative financial instruments was $14.688 billion; 
(d) 
Bear Stearns' 2007 10-K's representation that Bear Stearns "compared[d] 
its model-based valuations with counterparties in conjunction with 
collateral exchange agreements" and that Bear Stearns "regularly 
evaluate[d] and enhanced" its Value at Risk models "in an effort to more 
accurately measure risk of loss"; 
(e) 
Bear Steams' 2007 10-K's representations that the current market value of 
Bear Stearns' retained mortgages, mortgage-backed and asset-backed 
EFTA00722114

Case: 3:09-cv-00106 
Document #: 1 
Filed: 08/05/2009 
Page 9 of 19 
Financial Trust Company, Inc. vs. The Bear Stearns Companies Inc. 
Verified Complaint 
Page 9 
securities was $46.141 billion and that the current market value of its other 
retained derivative financial instruments was $19.725 billion. 
30. 
All of the SEC filings referred to herein which had been read and relied 
upon by Epstein had been certified by Molinaro as the CFO of Bear Steams and, with 
the exception of the 2007 10-K all of the SEC filings referred to herein had been certified 
by Cayne as the CEO. The 2007 10-K had been certified by Molinaro as CFO and 
Schwartz as CEO. 
31. 
The U.S. Securities and Exchange Commission, Office of Inspector 
General, Office of Audits, in a Report entitled "SEC's Oversight of Bear Stearns and 
Related Entities: The Consolidated Supervised Entity Program", dated September 25, 
2008 (the "SEC Report"), found that Bear Steams used outdated, 10 year old Value at 
Risk models to assign values to its mortgage-backed securities which it failed to review 
even after the SEC warned Bear Steams about them, that Bear Stearns failed to review, 
evaluate, or update its Value at Risk models, which were key to Bear Stearns' risk 
management, and that Bear Steams publicly reported values for its retained mortgages, 
mortgage-and-asset backed securities and other derivative securities and other 
derivative financial instruments that were materially higher than those assigned by 
Bear Steams' own risk managers and higher than Bear Steams itself used for those same 
securities in transactions with counterparties. 
32. 
On July 17, 2007, Bear Stearns reported that the Enhanced Fund could not 
meet investor redemption requests and margin calls in early June. Despite the Enhanced 
Fund's efforts to sell assets to raise liquidity, the Enhanced Fund could not meet its 
margin obligations and counterparties moved to seize collateral. 
EFTA00722115

Case: 3:09-cv-00106 
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Filed: 08/05/2009 
Page 10 of 19 
Financial Trust Company, Inc. vs. The Bear Stearns Companies Inc. 
Verified Complaint 
Page 10 
33. 
The day after the disintegration of the Enhanced Fund was announced, 
Cayne and Spector commenced participating in a 10-day bridge tournament in 
Nashville, Tennessee. 
34. 
On August 3, 2007, Bear Steams held a conference call that afternoon 
claiming that its financial position was "extremely solid...". 
35. 
Bear Steams issued a supporting press release in which it proclaimed, 
among other things, that "...the balance sheet, capital base and liquidity profile have 
never been stronger." 
36. 
Following the effective demise of the Enhanced Fund, Financial Trust on 
August 6, 2007 sold 56,350 shares of Bear Stearns stock for $101.3799 per share. Epstein 
was concerned by what he had learned from reports about the Hedge Funds' problems 
and intended to sell the 120,000 shares of Bear Steams stock held in the Merrill Lynch 
Account. 
37. 
On or about August 6, 2007, Epstein was in the Virgin Islands and had 
phone conversations with Cayne about the demise of the Hedge Funds and the extent 
of the danger they posed to Bear Stearns as an enterprise, and Epstein's intention to sell 
Financial Trust's holdings in Bear Stearns stock. 
38. 
Cayne, during the phone conversations on August 6, 2007 with Epstein, 
induced Epstein to retain Financial Trust's shares of Bear Stearns stock. 
39. 
Cayne advised Epstein in the August 6, 2007 phone conversations that 
Financial Trust should retain its Bear Stearns stock because the problems that caused 
the collapse of the Hedge Funds were contained to those two funds. In addition, Cayne 
represented to Epstein that Bear Stearns itself owned good assets with solid valuations 
and had adequate liquidity. Cayne further represented that the Enhanced Fund's high 
EFTA00722116

Case: 3:09-cv-00106 
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Financial Trust Company, Inc. vs. The Bear Stearns Companies Inc. 
Verified Complaint 
Page 11 
leverage and resulting liquidity issues did not affect Bear Stearns, itself, and did not 
impair Bear Stearns' ability to borrow in the repo market. Cayne also stated in multiple 
telephone conversations with Epstein beginning in August 2007 that Bear Stearns was 
working on a deal with China Citic Group, a large Chinese investment bank, which 
would provide a one billion dollar capital infusion as ample confirmation of Bear 
Stearns' financial health, notwithstanding the collapse of the Hedge Funds., so he 
advised Epstein to "hold tight" and for Financial Trust to retain its Bear Stearns stock as 
a solid investment. Epstein reasonably relied upon Cayne's representations which were 
made to induce Epstein to retain Financial Trust's shares of Bear Stearns stock. 
40. 
Bear Stearns stock closed on August 6, 2007 at $113.81 per share. 
41. 
On or about October 4, 2007, Bear Stearns hosted an "Investor Day" 
conference intended to reassure investors regarding the fixed-income segment of Bear 
Stearns that handled Bear Stearns' business in mortgage-backed securities. 
42. 
During the conference, Cayne, Schwartz and Molinaro reassured investors 
regarding the risk to Bear Stearns from Bear Stearns' subprime exposure and the 
adequacy of Bear Stearns' liquidity and capital, the financial condition of Bear Stearns 
and the value of Bear Stearns' retained financial assets. 
43. 
These claims were materially false and misleading when made. As Cayne, 
Schwartz and Molinaro knew, Bear Stearns' liquidity and capital reserves were 
insufficient given market conditions, placing Bear Stearns at risk. 
44. 
Epstein reviewed and relied upon the materially false and misleading 
statements made at the conference, inducing him to continue to retain the shares of Bear 
Stearns stock owned by Financial Trust in the Merrill Lynch Account. 
EFTA00722117

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Financial Trust Company, Inc. vs. The Bear Stearns Companies Inc. 
Verified Complaint 
Page 12 
45. 
If Cayne, Schwartz and Molinaro had honestly, completely and accurately 
reported the facts about Bear Stearns' valuation of assets and the true position of its 
liquidity and capital reserves, Financial Trust would have sold the 120,000 shares held 
in the Merrill Lynch Account. 
46. 
On or about November 14, 2007, just over a month after the reassurances 
made during the "Investor Day" conference, Bear Stearns announced that it expected to 
write down $1.2 billion on its retained mortgages, mortgage-backed securities and 
asset-backed securities and other derivative financial instruments. 
47. 
On or about November 14, 2007, Molinaro, in a publicized presentation at 
the Merrill Lynch Banking and Finance Conference, represented that the write-downs 
should "suffice" to accurately value products such as mortgages, mortgage-backed 
securities and asset-backed securities and other derivative financial instruments that 
Bear Stearns retained on its balance sheet and claimed that the worst of Bear Stearns' 
mortgage write-downs was over. 
48. 
Epstein was aware of, and subsequently reviewed and relied upon, the 
materially false and misleading remarks made by Molinaro at the November 14, 2007 
presentation, which induced him to retain the shares of Bear Stearns stock owned by 
Financial Trust held in the Merrill Lynch Account. 
49. 
On or about December 20, 2007, only five weeks after claiming that it had 
properly written down the value of its assets, Bear Stearns announced that it was 
increasing its write-downs by almost 60%, from $1.2 billion to $1.9 billion. 
50. 
On March 10, 2008, Bear Stearns issued a press release claiming that there 
was "absolutely no truth to the rumors of the liquidity problems" at Bear Stearns and 
EFTA00722118

Case: 3:09-cv-00106 
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Filed: 08/05/2009 
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Financial Trust Company, Inc. vs. The Bear Stearns Companies Inc. 
Verified Complaint 
Page 13 
quoting Schwartz as stating that Bear Stearns' "balance sheet, liquidity, and capital 
remain strong". 
51. 
On or about the weekend of March 14, 2008, JP Morgan offered just $2.00 a 
share for Bear Stearns stock. Eventually, JP Morgan paid $10.00 per share. 
52. 
Financial Trust sold 20,000 Bear Stearns shares, held in the Merrill Lynch 
Account, on March 14, 2008 for $34.9876 per share, and sold 100,000 shares held in the 
Merrill Lynch Account, on March 17, 2008 for $3.4095 per share. 
53. 
On March 31, 2008, JP Morgan and Bear Steams announced that JP 
Morgan had completed its acquisition of Bear Stearns. As part of the JP Morgan 
announced accord, the Federal Reserve agreed to help it guarantee Bear Stearns' trading 
obligations, including funding up to $30 billion of Bear Stearns less liquid assets . 
COUNT I (FRAUDULENT MISREPRESENTATION) 
54. 
Financial Trust repeats and realleges, as if set forth fully herein, the 
allegations of all the preceding paragraphs of this Verified Complaint. 
55. 
The material misrepresentations and omissions by Bear Steams alleged 
herein regarding the adequacy of Bear Stearns' liquidity and capital reserves, Bear 
Stearns' risk management, Bear Stearns' financial condition, and the value of Bear 
Stearns' assets were false and misleading at the time they were made and Bear Stearns 
knew they were false and misleading. 
56. 
The material misrepresentations and omissions made by Bear Stearns 
regarding its risk management infrastructure and processes, its financial condition 
including the value of its assets, ampleness of its liquidity and the adequacy of its 
capital reserves were misleading and false when made and Bear Stearns knew they 
were false and misleading. 
EFTA00722119

Case: 3:09-cv-00106 
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Filed: 08/05/2009 
Page 14 of 19 
Financial Trust Company, Inc. vs. The Bear Stearns Companies Inc. 
Verified Complaint 
Page 14 
57. 
Bear Steams' false and misleading material misrepresentations and 
omissions include, without limitation, the Form 10-Q's and Form 10-K's certified by 
officers of Bear Stearns and filed with the SEC for the calendar years 2006 and 2007, the 
false and misleading material statements and omissions made by Bear Steams' officers 
and top executives at the October 4, 2007 Investor Day Conference, the publicized 
presentation at the Merrill Lynch Banking and Finance Conference on November 14, 
2007, and Bear Steams' misrepresentation in a press release on or about March 10, 2008 
that there was no truth to the rumors of liquidity problems at Bear Stearns and quoting 
Bear Steams CEO Schwartz as stating that Bear Stearns' "balance sheet, liquidity and 
capital remain strong". 
58. 
Bear Steams' false and misleading material misrepresentations and 
omissions also include the direct misrepresentations by Cayne to Epstein on August 6, 
2007 that Bear Steams' financial condition and risk management were strong, that 
Bear's liquidity and capital reserves were sufficient, that the value of Bear Steams' 
assets was high, the collapse of the two Hedge Funds was the result of high leverage 
which was limited to those Funds and did not extend to the rest of the company, that 
Bear Stearns' access to funds in the repo market was not impaired, despite the collapse 
of the Hedge Funds, and that the imminent deal with the China Citic Group would 
provide a one billion dollar capital infusion as ample confirmation of Bear Steams' 
financial health, with Cayne expressly advising Epstein to "hold tight" to all of 
Financial Trust's shares of stock in Bear Steams. 
59. 
At the time Bear Stearns and its agents made the fraudulent 
misrepresentations and omissions they knew and believed that the representations 
were untrue, incomplete and misleading, they did not have confidence in the accuracy 
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Financial Trust Company, Inc. vs. The Bear Stearns Companies Inc. 
Verified Complaint 
Page 15 
of the representations and they knew that they did not have the basis for the 
representations that were stated or implied. 
60. 
Bear Steams also deceived Financial Trust through false and misleading 
misrepresentations and omissions regarding the availability of repo financing. 
61. 
Bear Stearns at times deceived Financial Trust through representations 
that Bear Steams knew to be ambiguous. Bear Stearns made these representations with 
the intention that they be understood in the sense in which they were false, or without 
any belief or expectation as to how they would be understood or with reckless 
indifference as to how they would be understood and therefore these ambiguous 
representations were fraudulent. 
62. 
Bear Stearns had reason to expect that the fraudulent misrepresentations 
and omissions made by Bear Stearns in its SEC filings referred to herein, its investor 
and broker-dealer conferences and press releases, and its direct conversations with 
Epstein, constituted information which would reach Epstein and would influence 
Epstein's conduct in the decision of whether to retain or sell Financial Trust's shares of 
Bear Steams stock. 
63. 
All of Bear Stearns' misrepresentations and omissions concerned facts that 
were peculiarly within the knowledge of Bear Stearns and not readily available to 
Financial Trust. Bear Stearns knew that as a result of Bear Stearns' misrepresentations 
and omissions, Financial Trust was acting under mistaken beliefs about material facts. 
64. 
Bear Stearns' fraudulent, false and misleading material misrepresentations 
and omissions induced Financial Trust to retain the shares of Bear Stearns stock at 
unsustainable values until such time as Financial Trust was forced to unload the stock 
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Financial Trust Company, Inc. vs. The Bear Stearns Companies Inc. 
Verified Complaint 
l'age 16 
at fire sale prices, causing Financial Trust to lose virtually all of its investment in these 
shares. 
65. 
At the time of Bear Steams' conduct and statements as referred to herein, 
Bear Stearns intended or reasonably expected Financial Trust to act or refrain from 
acting in reliance on Bear Stearns' false and misleading material misrepresentations and 
omissions. 
66. 
Financial Trust justifiably and reasonably relied upon Bear Stearns' false 
statements, omissions, misrepresentations and conduct as referred to herein in acting 
and refraining from acting in connection with retaining ownership of Bear Steams' 
stock, to the financial detriment of Financial Trust. 
67. 
proximately 
omissions. 
Financial Trust's reliance was reasonable and foreseeable and was 
caused by Bear Steams' false and misleading misrepresentations and 
68. 
Bear Stearns intentionally, knowingly, or 
communications to Financial Trust to be false and misleading. 
69. 
Bear Steams made these false and misleading material misrepresentations 
and omissions knowingly, willfully, maliciously and in wanton disregard of the rights 
of Financial Trust. 
70. 
Bear Steams' false and misleading misrepresentations and omissions, as 
alleged herein, proximately caused Financial Trust substantial harm and injuries and 
caused Financial Trust to sustain significant monetary damages, including both 
compensatory and punitive damages, in an amount to be determined at trial. 
recklessly caused its 
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Financial Trust Company, Inc. vs. The Bear Stearns Companies Inc. 
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COUNT II (NEGLIGENT MISREPRESENTATION) 
71. 
Financial Trust repeats and realleges, as if fully set forth herein, the 
allegations of the preceding paragraphs of this Verified Complaint. 
72. 
Bear Stearns, in the course of providing information to Financial Trust 
regarding its economic and financial condition and actively dissuading Financial Trust 
on August 6, 2007 and thereafter from selling its stock, supplied information and made 
express representations of fact to Financial Trust for the benefit and guidance of 
Financial Trust in its transactions which were material, false, incomplete and 
misleading when made and Bear Stearns knew or should have known they were 
material, false, incomplete and misleading. 
73. 
Bear Stearns failed to inform Financial Trust of the correct and true fads 
relating to the financial condition, liquidity and capital base of Bear Stearns and the 
danger to Bear Stearns stock, the price of which went into free fall as a consequence, 
and failed to exercise reasonable care and competence in supplying correct and 
complete information to Financial Trust. 
74. 
Bear Stearns negligently supplied incomplete and false information for the 
guidance of Financial Trust for the purpose of inducing Financial Trust to retain shares 
of Bear Stearns stock. The information was volunteered to Financial Trust and was 
material to Financial Trust's investment decisions at all relevant times. 
75. 
This incomplete, false and misleading information supplied by Bear 
Stearns was done so with the express intention of having Financial Trust rely upon it. 
76. 
Bear Stearns was manifestly aware of how Financial Trust would use the 
incomplete, false and misleading information and intended to supply it for that 
purpose. 
EFTA00722123

Case: 3:09-cv-00106 
Document #: 1 
Filed: 08/05/2009 
Page 18 of 19 
Financial Trust Company, Inc. vs. The Bear Stearns Companies Inc. 
Verified Complaint 
Page 18 
77. 
Bear Steams failed to exercise reasonable care and competence to ascertain 
the facts underlying the incomplete, false and misleading information communicated to 
Epstein and was in a unique position to know the facts and the inferences to be drawn 
from them. 
78. 
Financial Trust justifiably relied upon the incomplete, false and 
misleading information and representations supplied by Bear Stearns, as alleged herein. 
79. 
Bear Stearns' negligent misrepresentations and omissions, as alleged 
herein, proximately caused Financial Trust substantial harm and injuries and caused 
Financial Trust to sustain significant monetary damages, including compensatory 
damages, in an amount to be determined at trial. 
PRAYER FOR RELIEF 
WHEREFORE, Financial Trust respectfully requests the Court to enter judgment 
in its favor and against Bear Stearns for compensatory and punitive damages, as well as 
attorney's fees, court costs and other reasonable costs incurred, and pre-judgment and 
post-judgment interest. 
A JURY TRIAL IS DEMANDED ON ALL ISSUES TRIABLE BY A JURY. 
LAW OFFICES OF JOHN K. DEMA, 
Attorneys for Plaintiff 
/s/ Tohn K. Dema 
Dated: August 5, 2009 
JOHN K. DEMA, Esquire 
1236 Strand Street, Suite 103 
Christiansted St. Croix USVI 00820-5008 
Telephone: 
Facsimile: 
EFTA00722124

Case: 3:09-cv-00106 
Document #: 1 
Filed: 08/05/2009 
Page 19 of 19 
Financial Trust Company, Inc. vs. The Bear Stearns Companies Inc. 
Verified Complaint 
VERIFICATION 
TERRITORY OF THE VIRGIN ISLANDS : 
ss: 
DISTRICT OF ST. THOMAS 
Jeanne Brennan-Wiebracht, as Vice President of Financial Trust Company, Inc., 
being duly sworn, states that she has read the foregoing Verified Complaint, and that it 
is true, except as to that which is based on information and belief, which she believes to 
be true. 
FINANCIAL TRUST COMPANY, INC. 
By: 
Sworn and subscrted 
befo me this  41 
 day 
of 
2009. 
621trell
Jeafute Brennan-Wiebracht 
Vice President of Financial Trust Company, Inc. 
EFTA00722125

%is 44 (Rev. 11/04) 
Case: 3:09-cv-00106 
Document #: 1-2 
Filed: 08/05/2009 
Page 1 of 1 
CIVIL COVER SHEET 
The JS 44 civilcover sheet and the infonnation contained herein neither replace nor suaolement the filing and service ofpleadings or other papers as required by law, except as provided 
by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Coun for the purpose of initiating 
the civil docket sheet. (SEE INSTRUCTIONS ON 711E REVERSE OF THE FORM.) 
I. (a) 
PLAINTIFFS 
Financial Trust Company, Inc. 
(b) County of Residence of Pint Listed Plaintiff 
St. Thomas, U.S.V.I. 
(EXCEPT IN U.S. PLAINTIFF CASES) 
(c) Attorney's (Firm Name. Address, and Telephone Number) 
John K. Dema, Esquire, Law Offices of John K. Dema, P.C., 
1236 Strand Street, Suite 103 Christiansted, VI 00820; (340) 773-6 42 
II. BASIS OF JURISDICTION 
(Puce an -"t in One Box Only) 
C TIZENSHIP OF PRINCIPAL PARTIES(Place an "X" in One Box for Plaintiff 
(For Diversity Cases Only) 
and One Box for Defendant) 
O I 
U.S. Government 
O 3 Federal Quanta 
FIE 
DEE 
PTF 
DEE 
Plaintiff 
(U.S. Government Not a Party) 
Citizen °I TN: Stale 
O 1 
O I 
Incorporated or Principal Place 
of Business In This Sure 
4 
O 4 
O 2 
U.S. Government 
Defendant 
0 4 Diversity 
(Indicate Citizenship of Ponies in Item III) 
CM= Of Another Sale 
O2 
O 2 
Ineorponttod end Principal Place 
of Business In Another State 
O 5 
• 
5 
Citizen or Subject of a 
0 3 
O 3 
Foreign Nation 
0 6 0 6 
Foreiw, CauttW
DEFENDANTS 
The Bear Steams Companies Inc. 
County of Residence of First Listed Defendant 
(IN U.S. PLAINTIFF CASES ONLY) 
NOTE. IN LAND CONDEMNATION CASES. USE THE LOCATION OF TILE 
LAND INVOLVED. 
Attorneys (If Known) 
I
_
CONTRACT 
TORTS 
FORFEITURE/PENALTY 
BANKRUPTCY 
OTHER STATUTES
O 110 Insurance 
O 120 Pdarine 
O HO Miller Act 
O 140 Negotiable Instrument 
O 150 Recovery of Overpayment 
& Enforcement of Judgment 
O 151 Medicare Act 
0 152 Recovery of Defaulted 
Student Loans 
(Excl. Veterans) 
• O 153 Rceovely of Ovcipsymcni 
of Veteran's Stalin 
O 160 Stockholders' Suits 
O
 
190 Other Contract 
O
 
195 Contract Product Liability 
O 196 Franchise 
PERSONAL INJURY 
PERSONAL INJURY 
O 310 Airplane 
O 362 Personal Injury • 
O 315 Airplane Product 
Med. Malpractice 
Liability 
O 365 Personal Injury - 
O 320 &Mull. Libel & 
Product Liability 
Slander 
O 368 Asbestos Personal 
O 330 Federal Emplorrs' 
Injury Product 
Liability 
Liability 
O 340 Marine 
PERSONAL PROPERTY 
O 345 Menne Product 
O 370 Other Fraud - 
Liability 
O 371 Truth in Lending 
O 350 Motor Vehick 
O 380 Other Marna] 
O 355 Mao, Vehicle 
Progeny Damage 
Product Liability 
O 385 Property Damage 
9 
360 Dthes Personal 
Product Liability 
Injury 
O 610 Agocultere 
O 620 Other Food & Drug 
O 625 Drug Related Sarum 
of Privacy 21 USC 881 
O 630 Liquor Laws 
O 640 R.R. & Truck 
O 650 Airline Rep. 
O 660 Oo:upational 
Safetyfilealth 
O 690Oth: 
O 422 Appeal 28 USC 158 
O 423 Withdrawal 
28 USC 157 
O 400State Reapportsonmen: 
O 410 Antitrust 
O 430 Banks and Banking 
O 450 Commerce 
O 460 Deportation 
O 470 Racketeer Influenced and 
Catnips thganizatiorts 
O 480 Consumer Credit 
O 490 Cable/Sat TV 
O 810 Selective Service 
O 850 Securities/Commodities/ 
Exchange 
O 875 Customer Challenge 
12 USC 3410 
O 8900i/ter Statutory Actions 
O 891 Agricultural Acb 
O 892 Economic Stabilization Act 
O 893 Environmental Manus 
O 894 Energy Allocation Act 
O 895 Freedom of Information 
Act 
O 900Appeal of Fee Determination 
Under Equal Access 
toJustice 
O 950 Constitutionality of 
State Statutes 
PROPERTY RIGHTS 
O 820 Copyrights 
O 830 Patent 
O840 Trademark 
LABOR 
SOCIAL SECURITY 
O 710 Fair Labor Standards 
Act 
O 720 Latew/Mgmt. Relations 
O 730 Labor/MgmtRaceting 
& Disclosure Act 
O 740 Railway Labor Act 
O 790 Other Labor Litigation 
O 791 Empl. Ret. Inc. 
Security Act 
O 861 MA O393f0 
O 862 Black Lung (923) 
O 863 DIWC/DIWW (405(g)) 
O 864 SS1D Tide XVI 
O 865 RSI (405(g)) 
I 
REA I. PROPERTY 
CIVIL RIGHTS 
PRISONER PETITIONS 
FEDERAL TAX SUITS 
0
 
210 Land Cceekinemion 
O 220 Foreclostec 
O 230 Rent Lease & Ey:on-ens 
O 240 Tons to Land 
O 245 Tort Product Liability 
O 290 All Other Real Preps-sty 
• 
O 441 Voting 
O 442 Employment 
O 443 Housing: 
Accommodations 
O 444 Welfare 
O 445 Amer. w/Disabilities - 
Employment 
O 446 Amer. w/Duabilitia - 
Other 
O 440 Other Civil Rights 
O 510 Motions .o Vacate 
Sentence 
Habeas Corpus: 
O 530 General 
O 535 Death Penalty 
O 540 Mandamus & Other 
O 550 Civil Rights 
O 555 Prison Condition 
O 870 Taxes (U.S. Plaintiff 
or Defendant) 
O 871 IRS—Third Petty 
26 USC 7609 
ra t 
V.1ORIGIN 
(Place n "X' in One Box Only) 
en c Transferred 
n 
Appeal to District 
Judge from 
'H 
Original 
2 R moved from 
CI 3 
Remanded from 
O  4 Reinstated or '—' 4 another distrifroctm 
'-' A w Multidistriet 
O 
7
Magistrate 
Proceeding 
State C wt 
Anciellste Court 
Ravened 
(meth) 
Lineation 
Judgment 
fl  :-. 
g 
.s. . 
giSecti$toaitiuk.tisr artich you are firms (Do not cite Jurisdictional statutes unless diversity): 
VI. CAUSE OF ACTION 
Brietldese_dpt 
of cause: 
. 
Action For inn Damages Based on Fraudulent Misrepresentation and Negligent Misrepresentation 
VII. REQUESTED IN 
O CHECK IF THIS IS A CLASS ACTION 
DEMAND S 
CHECK YES only if demanded in complaint: 
COMPLAINT: 
UNDER arni. 
23 
JURY DEMAND: 
B Yes 
O No 
VIII. RELATED CASE(S) 
(See iassructioesh 
IF ANY 
JUDGE 
DOCKET NUMBER 
DATE 
NA 
UJ 
5/ 
42001 
FOR OFFICE 
LY 
RECEIPT a 
AMOUNT 
LYING IF? 
RNEY F RECORD 
JUDGE 
MAG. JUDGE 
EFTA00722126