Back in February 2007, recently arrested Bear Stearns hedge-fund manager Ralph Cioffi bought himself an estate in Southampton for$10.7 million. It was a lovely place: a 6,500-square-foot home on two and a half acres, with six bedrooms, seven baths, a pool, tennis court, and separate guesthouse, and although it was just down the street from his colleague John Paulson's "Old Trees" estate, it was much less expensive (Paulson paid $42 million). Not that Ralph didn't have a lot of cash lying around: He had just removed $2 million from his own fund, in fact! Great timing, since he could easily have lost it: Even then, the fund was on the brink of imploding. "Subprime losses will be far worse than anything people have modeled," he wrote in an e-mail several weeks later to his colleague Matthew Tannin. Not that Cioffi was wrong to buy the house or to hang onto it (he used his other properties to cover his bail). After all, it could be a nice place for a guy on house arrest to hang out.

Cioffi's Hamptons Hideaway [NYP]

Earlier: Bear Stearns Managers Arrested