How the Bear Stearns Fraud Case Unfolded

"This should have been pursued by a civil or regulatory matter by the Securities and Exchange Commission and not turned into a criminal case," Bachner said. "They did this after Bear Stearns went out of business, they didn't indict any of the higher-ups in Bear Stearns, and certainly Cioffi and Tannin are going to have a very strong argument that everything they did was OK'd by supervisors and they are being made scapegoats."

Some observers said the intense pressure came from Washington because it wanted a high-profile Wall Street case to send the message that the Justice Department is serious about cracking down on mortgage fraud. It is unclear whether Bear Stearns is actually the strongest case the FBI has of the 19 major corporations it is investigating — or simply a convenient target.