Mayer Brown partner claims Refco innocence

The lawyer representing Mayer Brown partner Joseph Collins in the Refco fraud case has claimed his client was kept out of the loop on hidden debt and sham transactions, reports The New York Law Journal.

Collins is accused of helping to conceal a $2.4bn (£1.6bn) corporate fraud, but William Schwartz of Cooley Godward Kronish said the three top Refco officials who defrauded banks and investors 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 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.

The three principals are former chairman and chief executive officer Phillip Bennett, now serving 16 years for the fraud that landed the financial services company in bankruptcy, and two other men who have pleaded guilty in the case and are co-operating with the US Government by testifying against Collin - ex-finance chief Robert Trosten and former executive vice-president Santo Maggio.

Assistant US Attorney Christopher Garcia told the jury that Collins played a key role in helping Refco engage in "massive sham loan transactions" from 2000 to 2003 to hide hundreds of millions of dollars in debt in another entity, RGHI, a holding company partially owned by Bennett.

"Why did this defendant lie for Refco?" Garcia asked. "Because it was his biggest client from 1997 through to the collapse of Refco. This man made more than $40m (£26.5m) for his firm."

Schwartz ridiculed this alleged motive in his opening statement, repeatedly reminding the jury that "not one cent" of the fraud proceeds went to Collins, who worked out of Mayer Brown's Chicago and New York offices.

Schwartz promised the jurors that during a trial expected to last several weeks they would "see more lawyers than you've ever seen in your life."

He said lawyers "represent clients, they do not investigate clients," and they "are not accountants, they do not check the books of companies and they do not add up the figures and subtract the figures."

Collins, who is on leave from Mayer Brown, joined the firm in 1994 and headed its derivatives group. He is charged in a superseding indictment with one count of conspiracy, two counts of securities fraud, two counts of making a false filing with the Securities and Exchange Commission, four counts of wire fraud and five counts of bank fraud.

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