Posts Tagged ‘Refco’

Three strikes for Refco executives

Friday, April 18th, 2008

One of former Refco president Tone Grant’s defense attorneys noted in court documents transcribing the discussions the day the jury returned a verdict that a phantom mark on the jury verdict form, caused due to printing, was in the guilty box, and was a “bad omen,” he said. And though he was right, perhaps a worse omen for his client was that two Refco executives Phil Bennett and Robert Trosten had pled guilty to fraud charges.Download file

Tone Grant, often described as the All-American guy who played football at Yale and served in the Marine Corps., was found guilty on all counts of defrauding investors of $2.4 billion. Download file Another bad omen for Grant, when he is sentenced Aug. 7, 2008, is that in final comments the trial judge thanked the jury as being “a really terrific jury.” No doubt, the judge agreed with the verdict.

The sad story of Refco still has more to go as Mayer Brown’s Joe Collins is up next for trial.

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Follow the leader

Wednesday, February 27th, 2008

Robert Trosten, Refco’s former chief financial officer, is the third Refco executive to plead guilty to charges of fraud and conspiracy, following the examples of Phillip Bennett, former CEO, and Santo Maggio, former executive VP. The Washington Post is reporting that Trosten is cooperating with prosecutors and faces up to 30 years in prison for bank fraud and 20 years for securities- and wire-fraud.

Tone Grant, former Refco president and Joseph Collins, of law firm Mayer Brown and Refco’s former outside counsel, are maintaining that they are not guilty and will stand trial.

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Guilty pleas in Refco drama

Thursday, February 21st, 2008

Last Friday Phillip R. Bennett, former chief executive Refco Inc., pleaded guilty to 20 counts of fraud and now faces life in prison for conspiracy, securities fraud, bank fraud and falsifying filings with the Securities and Exchange Commission. This follows executive VP Santo Maggio’s confession in December, which led to him giving up $23 million. Refco executives Robert C. Trosten, Tone N. Grant and lawyer Joseph P. Collins are still facing charges and, according to the New York Times, are maintaining their innocence.

While this is certainly progress in the two year debacle, I’d like to take this opportunity to point out that the victims have still not been made whole.

More than $100 million in Refco retail customer funds were tied up in this debacle, and those retail traders have “not received a dime” of compensation, says account holder Gail Butler. And Paul Palley, one of the leaders of the Refco Account Holders group that organized on the internet and filed several law suits to get their money back is continuing the fight.

While it’s great that the NFA and the CFTC have increased their efforts to root out fraud by raising the capital requirements for FX dealers, why haven’t they stepped up to fight for these retail traders? As Bennett and Maggio have shown us, it’s never too late to do the right thing. I’d like to see NFA and the CFTC step up and do the same.

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Oh 'dem Red Bones

Monday, August 27th, 2007

The mother of all lawsuits was filed against the usual Refco defendants last week by Marc S. Kirschner, trustee of the Refco Litigation Trust. The suit, filed in the Circuit Court of Cook County, Ill., slams the usual suspects: Phillip R. Bennett, Santo C. Maggio , Robert C. Trosten and Tone N. Grant, but then also accuses other firms and individuals of basically aiding and abetting the schemes that led to the Refco bankrupcy.

In the 158-page suit, the trustee alleges that “the defendants include a “who’s who” of some of the biggest names in corporate finance, law, and accounting, whose reputations and substantial assistance were required for Bennett, Maggio, Trosten and Grant (the “Refco Insiders”) to strip out billions of dollars in Refco assets. Bennett and other Refco Insiders face criminal charges for their misconduct. The trustee brings this action to recover from the Refco Insiders and those who knowingly assisted them in stripping out Refco’s assets, causing billions of dollars in damage to the Company and its creditors.” See the full lawsuit here.

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