Bail Denied for Daiwa Bond Trader : Scandal: Prosecutors say Toshihide Iguchi has been reluctant to cooperate in the case.

A federal judge denied bail Tuesday to the bond trader who lost $1.1 billion at Daiwa Bank, and prosecutors said for the first time that the trader has been reluctant to cooperate with investigators.

Toshihide Iguchi, 44, was ordered to remain in custody until he is sentenced. He pleaded guilty last month to forgery and embezzlement in his scheme to cover up the trading losses at Daiwa Bank over a 12-year period.

A federal grand jury in Manhattan last week returned a 24-count indictment against Daiwa Bank Ltd., and U.S. authorities ordered it to close its U.S. operations by Feb. 2. The major Japanese bank is accused of carrying out an elaborate criminal plot to try to hide a $1.1-billion trading loss from U.S. regulators. The bank has said it will fight the criminal charges.

In seeking the release of his client, defense attorney Vincent Briccetti, said, “Mr. Iguchi neither has the means nor the desire to flee.” Briccetti had asked that Iguchi be kept confined at home but be permitted limited travel in the New York metropolitan area. “He is not a danger to a person or to a community.”

Although Iguchi has cooperated with authorities since his arrest in late September, “his cooperation with the government doesn’t mitigate the seriousness of his offense,” federal prosecutor Michael Simons said in arguing against Iguchi’s release. Simons also said it would be premature to assume the government would seek to reduce Iguchi’s sentence in exchange for his cooperation so far.

“That day is far down the road,” Simons said. “He can best be described as reluctant to cooperate.”

In denying the request for release, U.S. District Judge Lewis Kaplan said that although Iguchi is an American citizen with strong ties to this country, “the life he built in the United States since 1969 has in very important ways been destroyed.”

Sentencing was tentatively scheduled for April 15. Iguchi could face fines and a prison term of as long as 90 years.

The prosecution also argued that even though Iguchi’s scheme mostly involved trading securities owned by the bank and not its customers, his crimes were not without victims.

About $377 million in securities managed by Daiwa for pension funds in Japan were part of the losses, Simons told the judge. He also said that “hundreds of employees could lose their jobs in the weeks to come” as a result of the scandal.

Daiwa has said it will reduce its worldwide staff by 27%.

Speaking to reporters outside the courthouse, Briccetti said Iguchi was “no worse off right now than he was this morning or an hour ago. He’s in exactly the same position he was in earlier.”

Meanwhile, a congressional subcommittee, in response to the Daiwa scandal, scheduled a Dec. 5 hearing on U.S. regulation of foreign banks. Regulators have been criticized for failing to act more quickly on early signs of supervisory problems in Daiwa’s trading.