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Former Cantor Fitzgerald trader David Demos, 35, cheated investors by lying about the price of mortgage bond transactions he handled for them after the financial crisis, according to an indictment filed by U.S. prosecutors.

Prosecutors said Demos, a trader and managing director at Cantor Fitzgerald from November 2011 to February 2013, defrauded customers by fraudulently inflating the price at which the company could buy residential mortgage-backed securities. The goal, prosecutors said, was to induce customers to pay a higher price for mortgage bonds and to decrease the price at which Cantor could sell them in order to get investors to sell bonds at cheaper prices.

The scheme allowed Cantor Fitzgerald and Demos to reap illegal profits, prosecutors said, while causing their customers to sustain millions of dollars of losses. The victims included asset managers and firms affiliated with or subsidiaries of recipients of funds from the U.S. government's financial crisis-era bailout program called Troubled Asset Relief Program, or TARP, prosecutors said.

The case marked the latest action by federal prosecutors in Connecticut against traders accused of cheating their customers on prices of mortgage-backed securities. Others charged to date include two former Royal Bank of Scotland traders, who have pleaded guilty, and three former traders at Nomura Holdings, who are scheduled to face trial on Feb. 27.