Legal News

What Did Joe Know About Refco?

By Ashby Jones

The criminal trial of Mayer Brown partner Joseph Collins started this week in Manhattan federal court. Collins, a former outside counsel to defunct trading firm Refco, has been accused of participating in a scheme with Refco insiders to of conceal fraudulent transactions from investors.

On Wednesday, Collins’s lawyer, Cooley Godward’s William Schwartz, laid out the nut of the case — that Collins was kept out of the loop at Refco, and therefore didn’t know about hidden debt and sham transactions. Click here for the story, from the New York Law Journal.

Schwartz said the three top Refco officials who defrauded banks and investors and ultimately destroyed the firm — Phillip Bennett, Robert Trosten and Santo Maggio, all of whom have been convicted on fraud charges — made a victim out of “an honest lawyer who believed he was representing an honest, trustworthy company.”

The issue at the trial, said Schwartz, was “whether Joe Collins was on the inside or the outside - whether they kept him out of the loop, whether they kept him at arm’s length, whether they lied to him so he could represent Refco” as an honest company.

According to the story, assistant U.S. attorney Christopher Garcia countered by telling the jury that Collins played a key role in helping Refco engage in “massive sham loan transactions” from 2000 through 2003 to hide hundreds of millions of dollars in debt in another entity, RGHI, a holding company partially owned by Bennett.

Full post as published by Law Blog - WSJ.com on May 14, 2009 (boomark / email).