Refco ex-CEO Bennett pleads guilty to fraud
By Paritosh Bansal
NEW YORK (Reuters) - Former Refco Chief Executive Phillip Bennett pleaded guilty on Friday to fraud and other charges stemming from the 2005 collapse of the futures and commodities broker.
Bennett, 59, admitted to concealing the fraud from Refco's auditors, investors, buyout firm Thomas H. Lee Partners <THL.UL>, which bought a majority interest in Refco through a $1.9 billion leveraged buyout in August 2004, and others.
"I wish to publicly apologize to my family and to all those who were harmed by my conduct," Bennett, his voice breaking, told the judge during a hearing in U.S. District Court in Manhattan. "I take full responsibility for my actions."
Bennett had been scheduled to go on trial in March, along with former Chief Financial Officer Robert Trosten and former President Tone Grant, in a case that drew comparisons to the furor over a massive accounting fraud that drove giant telecommunications company WorldCom Inc into bankruptcy.
The 20-count indictment charged Bennett with conspiracy, securities fraud, bank fraud, wire fraud, false filing with the U.S. Securities and Exchange Commission, material misstatements to auditors and money laundering.
District Judge Naomi Buchwald, who accepted Bennett's plea, set a sentencing hearing for May 20. Bennett, who is a British citizen, faces a maximum of 315 years in prison and deportation.
Buchwald denied a request by the government to remand Bennett to custody and instead made his bail terms stricter, limiting his residence to his home in New Jersey and imposing restrictions on when he can travel to New York.
"Mr. Bennett has candidly acknowledged his involvement in the matter," his lawyer, Gary Naftalis , said after the hearing. "He was forthcoming and candid and wants to put this matter behind him."
Bennett, a former Cambridge University rugby player, took over as chief executive at Refco in 1998. He has been in the United States since 1978 and joined Refco in 1981 from Chase Manhattan Bank, where he worked in lending.
As chief financial officer of Refco from 1983, he helped build a small futures broker into a global empire with operations in 14 countries, 2,400 staffers, and a huge derivatives clearing operation.
Refco and 23 affiliates filed for Chapter 11 bankruptcy protection on October 17, 2005, a week after revealing that Bennett had hidden $430 million of bad customer debt. It later liquidated its operations.
In December, Santo Maggio, who was president of the Refco Capital Markets unit, pleaded guilty in the case. Maggio agreed to cooperate fully with U.S. authorities in their investigation of fraud at the company.
The same month, prosecutors, along with postal inspectors and the SEC, filed charges against Joseph Collins, a former outside lawyer for Refco. He has pleaded not guilty.
The Refco collapse is still being investigated by the U.S. Attorney's office in Manhattan along with the U.S. Postal Inspection Service.
A spokesman for the postal inspectors said the agency and prosecutors have put in a "a lot of time and effort" in the case. "Today his plea illustrates their efforts were not in vain," spokesman Al Weissmann said.
(Additional reporting by Martha Graybow and Gina Keating, Editing by Andre Grenon, Gerald E. McCormick, Richard Chang, Gary Hill)