Joseph P. Collins, a former Mayor Brown partner, has been sentenced to seven years in prison for his role in a $2.45 billion investment fraud scheme involving Refco Inc. He had hoped to obtain a more lenient sentence.
In July 2009, a jury found Collins guilty of wire fraud and securities fraud, as well as conspiracy to commit wire fraud, securities fraud, money laundering, bank fraud, and making false filings with the SEC. During his criminal trial, his defense attorneys argued that he did not know about the Refco fraud scam. However, while Southern Judge Patterson said that he believes Collins did not commit his crimes out of greed, Patterson noted what he called the firm partner’s “excessive loyalty” to his biggest client. According to Assistant U.S. Attorney Christopher J. Garcia, Collins brought in over $40 million to his law firm from his work with Refco.
Collins provided legal counsel and drafted documents that Refco principals used to conceal the company’s actual financial state while they made themselves wealthier. The government says that the documents were used to defraud Thomas H. Lee Partners, which owned a majority stake in Refco, and investors who purchased IPO shares in 2005.
Collins testified that Refco officials lied to him. He says he did not know that the financial services firm was conducting bogus transactions to conceal its true financial state from auditors and others. Collins says he did not personally profit from the scheme.
Former Refco CFO Robert C. Trosten and Ex-EVP Santo C. Maggio cooperated with the government in its case against Collins. Trosten and Maggio both pleaded guilty to the criminal charges filed against them over the Refco securities fraud scam. Former Refco CEO and Chairman Phillip Bennett is serving a 16-year prison term after pleading guilty in his criminal case. Meantime, Tone Grant, ex-Refco Group Ltd. president, is serving a 10-year prison term after he was convicted by a federal jury.
Related Web Resources:
Ex-Mayer Partner Gets 7 Years Over Refco, New York Law Journal, January 15, 2010
Former Refco Lawyer Collins Convicted in $2.4 Billion Fraud, Bloomberg, July 11, 2009