Ex-Refco boss charged with fraud
Refco’s former chairman and chief executive Phillip Bennett was arrested yesterday and charged with securities fraud, two days after the company, the largest independent American futures broker, said he hid $430m (£245m) in unpaid debts.
American attorney Michael Garcia told reporters yesterday that Bennett, 57, and unidentified accomplices “hid from investors and regulators hundreds of millions of dollars that one of Bennett’s companies owed to Refco”. Bennett was arrested on Tuesday night and is scheduled to appear in federal court in Manhattan later.
The six-page complaint lays out a scheme it alleges began at least as early as 2004 and continued into this month. According to officials, Bennett used loans of as much as $545m to an unnamed customer to conceal debt owed to Refco by a company he controlled, Refco Group Holdings.
Concealing the transactions may have made Refco appear more financially sound as the company and underwriters including Credit Suisse First Boston prepared for a $583m initial public offering in August. Since the company’s disclosure on Monday, the shares have plummeted more than 60 per cent to less than half the IPO price, as the Securities and Exchange Commission opened an investigation and shareholders filed lawsuits. Garcia said Federal investigators had been working “around the clock” for the past two days.