Prosecutors will not be allowed to suggest to a jury in the trial of two former Bear Stearns hedge fund managers that they believe one defendant tried to hide certain email evidence, a U.S. judge ruled on Thursday.

In a sometimes heated pre-trial conference before the jury is selected next Tuesday, the judge also ruled that defense lawyers may not tell the jury that the contents of defendant Matthew Tannin's gmail account were voluntarily turned over.

We are going to try this case on the merits of the case, said U.S. District Court Judge Frederic Block.

He expressed his impatience with prosecutors James McGovern and Patrick Sinclair during an intense exchange with Tannin's attorney Susan Brune in Brooklyn federal court.

If you don't have enough evidence in these 500 exhibits and 38 witnesses against these people then maybe you shouldn't be successful, Block said.

The hearing was called to resolve differences over the gmail account following a series of court filings and hearings in recent weeks as prosecutors and lawyers for the former hedge fund managers Ralph Cioffi, 53, and Tannin, 48, sparred over what evidence should be admitted at trial.

Cioffi and Tannin were indicted in June 2008 for fraud, and Cioffi also was charged with insider trading, the first managers accused of criminal charges from a company that collapsed in the financial crisis. Both face up to 20 years in prison if convicted.

The hedge funds' failure in the summer of 2007 cost investors $1.4 billion. Less than a year later in March 2008, Bear Stearns Cos also collapsed. It was bailed out by the government and then sold to JPMorgan Chase & Co.

Emails written by both men are central to the government's case and several are cited in the indictment. The government accused the pair of promoting their funds, which were crammed with risky subprime mortgage backed securities, while privately expressing fears in emails of a market calamity.

Prosecutors said Tannin deleted his gmail account with Google Inc on the advice of his lawyers but his attorney said he closed the account and that the contents had been preserved.

The U.S. Attorney's office has repeatedly suggested...that there was something improper, Brune said in court on Thursday. We have been consumed with very, very ugly briefs that impugned the name of my firm and Mr. Tannin's good name.

McGovern told the judge prosecutors now had the emails from Google and we know what Mr. Tannin was trying to put out of reach of the government.

Jury selection starts on Tuesday with opening arguments expected later in the week. The trial is expected to last five or six weeks.

The case is U.S. v. Cioffi and Tannin 08-415 in U.S. District Court, Eastern District of New York (Brooklyn)

(Reporting by Grant McCool; editing by Carol Bishopric)

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