Ex-Refco Chief Bennett's Guilty Plea May Help Former Deputies
bloomberg.com | 2/16/08 | David Glovin and Patricia Hurtado
Feb. 16 (Bloomberg) -- Refco Inc.'s former Chairman Phillip Bennett, who faces possible life in prison after pleading guilty to fraud and conspiracy in a scheme that cost investors $2.4 billion, may have helped the defense of two ex-colleagues set for trial next month over their alleged roles in the crime.
Bennett's plea yesterday in Manhattan federal court came a month before he was to be tried with the two men for deceiving banks, auditors, and investors, including Boston-based buyout firm Thomas H. Lee Partners LP. Ex-Refco finance chief Robert Trosten and former President Tone Grant have pleaded not guilty to helping Bennett, and will face trial March 17.
``I know I was wrong, and I deeply regret it,'' Bennett, told U.S. District Judge Naomi Buchwald, his voice cracking as he spoke. ``I take full responsibility for my conduct.''
His admission of responsibility may help Trosten and Grant by enabling them to claim Bennett alone was behind the fraud. Their former boss, a British citizen, didn't agree to cooperate with the government and is unlikely to appear as a prosecution witness at trial.
Trosten's lawyer, Robert Morvillo, and Grant's lawyer, Aitan Goelman, declined to comment. Bennett still faces civil lawsuits filed by investors, as do Trosten, Grant, and Refco's auditors and underwriters.
Once the biggest independent U.S. futures trader, Refco collapsed in October 2005, two months after raising $670 million in an initial public offering. The New York-based firm, which also provided clearingand prime brokerage services, filed for bankruptcy days after disclosing that a Bennett-controlled firm owed hundreds of millions of dollars to Refco.
Bennett, 59, pleaded guilty to all 20 counts in a federal indictment, including securities and wire fraud, conspiracy, money laundering and bank fraud. The plea didn't involve any promises regarding leniency. Defense lawyer Gary Naftalis alerted prosecutors on Feb. 14 that Bennett wished to plead guilty, Assistant U.S. Attorney Neil Barofsky said.
Under U.S. guidelines, Bennett faces life imprisonment with a maximum penalty of 315 years, as well as forfeiture of $2.4 billion, prosecutors said. Bennett, who has only $20 million according to Naftalis, will be sentenced May 20. Defense attorneys will likely argue that, because he pleaded guilty to all the charges without a government deal, Bennett should receive a prison term that won't keep him in jail for life.
``Bennett has candidly acknowledged his involvement in the matter,'' Naftalis said after the plea. ``He was forthcoming and candid and wants to put this matter behind him.'' (Excerpt)