Former Refco CEO and company co-owner Phillip Bennett has pled guilty to 20 criminal charges related to the $2.4 billion fraud-related downfall of his company. Former CFO Robert Trosten has also pled guilty to five counts stemming from similar criminal activities.
Under Bennett’s supervision, Refco lost millions of dollars while trading in securities and derivatives in the 1990’s. Bennett tried to hide the losses by making them appear as if they were debts owed to Refco by Refco Group Holdings Inc., which is a company that Bennett controlled. Trosten helped direct these fraudulent transfers to the holding company.
The scam came to light after the company was purchased in 2004 and went public. Thomas H. Lee Partners LP had bought a majority interest in Refco. In 2005, Refco announced the discovery that an entity owned by Bennett owed Refco $430 million.