Thursday, October 26, 2006

Charges Filed Against Austrian Bankers Tied to Refco

The fallout from the collapse of futures-trading firm Refco in October 2005 has hit in Austria, where prosecutors in Vienna charged nine individuals for their role in transactions between Refco and Austrian bank Bank Fuer Arbeit und Wirtschaft AG (BAWAG) that led to large losses at the bank.  BAWAG lent former Refco CEO Phillip Bennett over $400 million right before Refco's collapse, which he used to repay debts owed to Refco that were not properly accounted for by the firm.  It turns out BAWAG had significant losses on trading by Wolfgang Floettl, son of a former CEO of BAWAG, in Refco accounts.  The charges include embezzlement, fraud, and false entries in the bank's books, and the defendants include Floettl, two former chief executives, and an auditor from KPMG's Austrian branch.  An AP story (here) discusses the charges.

Back in the U.S., federal prosecutors said in court that a new indictment will be filed in the next two weeks in prosecution of Refco executives, which comes on top of a new indictment on October 24.  Bennett and former Refco CFO Robert Trosten both entered not guilty pleas to the most recent indictment, and it's not clear whether the new indictment will include additional defendants.  Given the speed with which Refco collapsed, less than a week, it is not surprising that the investigation has taken time to sort out how it's demise occurred so quickly.  The quick filing of charges against Bennett in November 2005 has meant that prosecutors will have to deal with an increasingly exasperated judge who wants the case pushed along, according to a New York Post story (here).  (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2006/10/charges_filed_a.html

Fraud, International, Prosecutions | Permalink

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