Prosecutors have added charges to their indictments of former Refco chief executive officer Phillip Bennett and former chief financial officer Robert Trosten and handed up a new indictment of former president Tone Grant.
The superseding indictment, announced Tuesday by Michael Garcia, U.S. Attorney for the Southern District of New York, charges all three men with bank fraud and money laundering in connection with the 2004 leveraged buyout of the commodities brokerage by Thomas H. Lee Partners. Prosecutors also filed wire fraud charges against Bennett and Grant.
The bank fraud charges carry a potential sentence of 30 years in prison and a $1 million fine; the money laundering charges, up to 10 years in prison and a $250,000 fine.
Mr. Grant is innocent and will vigorously fight these charges,” his lawyer, Norm Eisen of Zuckerman Spaeder, told Bloomberg.
According to a press release fired off by Garcia, in August 2004 Thomas H. Lee Partners shelled out $1.9 billion through an LBO for a majority interest in Refco. In connection with that transaction, Refco sold about $600 million of bonds and borrowed roughly $800 million from a syndicate of banks. A year later, in August 2005, it raised about $583 million in an initial public offering.
Two months later, continued Garcia’s release, Refco disclosed that it was owed about $430 million by an entity controlled by Bennett. The news sent the share price tumbling, and Refco’s stock was delisted by the New York Stock Exchange. Refco and many of its subsidiaries filed for bankruptcy soon after.