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Mayer Brown

Mayer Brown Partner Joe Collins Found Guilty In Refco Fraud

Late on Friday July 10th 2009, Joseph Collins, a Mayer Brown law partner since 1994, was convicted of securities fraud and other criminal charges in a financial cover-up that brought down the one-time commodity trading giant Refco back in the fall of 2005. A federal jury in New York found Attorney Collins guilty on five of 14 counts, including two counts of wire fraud, two counts of securities fraud and conspiracy, according to the U.S. attorney's office in New York. A mistrial was declared on nine other counts. Collins is scheduled to be sentenced on November 3rd.

The Chicago Tribune has more information on this case here. The verdict ended a trial that lasted nearly two months and took some unexpected turns. In the middle of the trial, the judge presiding over the case became sick and had to be replaced. Apparently, "After the verdict was returned today, two jurors who declined to provide their names told Bloomberg News that the male juror pointed frequently at panel members. The two jurors said deliberations were otherwise uneventful. The jurors said the vote was 11-1 to convict on the remaining nine counts. The holdout was the juror who pointed at the others. That juror wanted a mistrial, they said."

Toomre Capital Markets LLC ("TCM") has previously written a number of blog posts about the Refco Scandal and Mayer Brown's possible involvement. Those posts can be found here and here.

Joseph Collins, Refco's External Lawyer, Indicted for Fraud

Toomre Capital Markets LLC ("TCM") has previously written several posts about the massive fraud that occurred at Refco and how various other organizations might have contributed to the illegal activities. These posts included a highly popular one entitled Details on Mr. Flottl, Bawag and Refco Losses in WSJ and another that is frequently searched entitled Connections: Refco, Bawag, Ross Capital Markets and Liberty Corner???. In the October 2005 posts Law firm Mayer, Brown, Rowe & Maw involved in Refco case and Chicago Sun-Times: More on Refco and Mayer Brown, TCM noted the rather curious fact that various publications were suggesting that Refco's outside legal advisor, Joseph P. Collins of Mayer, Brown, Rowe & Maw LLP, might be involved in the Refco scandal.

Throughout the entire Enron scandal, no external lawyer to Enron was ever indicted for the work done on special purpose entity transactions that were used to hide Enron's losses. Why then was Attorney Collins, a well-known specialist in derivatives and securitization legal specialties, being linked to the Refco scandal? On Tuesday December 18, 2007, the public learned why when both the Southern District of New York and Securities and Exchange Commission indicted Attorney Collins for being an alleged active participant in the Refco fraud. TCM is really sad to learn of these developments as the firm has had some direct interaction with Joseph P. Collins and Mayer Brown and found their legal work to be absolutely first class.

A copy of the federal indictment is here and the SEC complaint is likewise linked here. Click on this link to get a summary of all of the relevant news stories.

Chicago Sun-Times: More on Refco and Mayer Brown

The following article in the Chicago Sun-Times on October 31, 2005 entitled Refco case could end up damaging law firm, too gives more details on how Mayer Brown Rowe and Maw – one of the biggest law firms in Chicago and the United States – could find itself mired in the widening scandal surrounding commodities brokerage Refco Inc. The article reveals that Mayer Brown has hired Mark Villa, of Washington D.C.’s Williams & Connolly, a lawyer who specializes in defending law firms.

Legal experts are said to disagree about whether Mayer Brown could face liability for its Refco work. A 1994 U.S. Supreme Court ruling indicates that law firms are not liable for “aiding and abetting” securities fraud and a plaintiff’s lawyer with a Refco suit pending indicated that Mayer Brown was an unlikely defendant. The article goes on to quote David Ruder, former chairman of the U.S. Securities and Exchange Commission and now a professor at Northwestern University School of Law, who indicated that there is a possibility of liability for drafting the documents, but the law is uncertain.

Law firm Mayer, Brown, Rowe & Maw involved in Refco case

The Financial Times of London reports this morning in an article entitled "Leading Law Firm Involved in Refco Case" that Mayer, Brown, Rowe & Maw – one of the world’s top international law firms – worked on the loans used by Phillip Bennett, the former chief executive officer of Refco to disguise his debt of $430 million to the brokerage group.

Selected reference material on the unfolding Refco story and Mayer Brown involvement:

More Refco Developments

This entry is a follow-up to Saturday's post entitled "Refco: No longer a question of if, but when for bankruptcy filing".

The Times Online reports here that "Refco debt inquiry is widened to other staff". The story states that the company-appointed investigators believe that other Refco staff knew about Mr Bennett’s company, where the debts were concealed. The investigators now want to know if those same people knew what the company was being used for.

BusinessWeek has posted this story entitled "The Family Man Behind Refco's Woes" which is written by Mark Morrison who knew Phil Bennett as a father, soccer coach, and witty sophisticate who won the trust of financial pros. The author asks "So who is this ousted CEO charged with fraud?"

The Guardian has a story entitled "Crisis-hit US futures broker moves closer to breakup" that summarizes well the current status of the Refco story.

According to this article from, Kevin Marino, the attorney for Liberty Corner Capital Strategies, the New Jersey hedge fund that was involved in the questionable transactions with Refco, says lawyers with Mayer, Brown, Rowe & Maw drafted some of the loan documents. Marino claims that Mayer Brown's involvement in the deal is one reason officials with Liberty Corner never questioned the legitimacy of the loans, which federal prosecutors say were used by former Refco CEO Phillip Bennett to conceal a $430 million accounting fraud from the company. According to a Mayer Brown spokeswoman, Sheila Turner, "Based on our investigation to date, it appears that lawyers in our firm from time to time documented loans for Refco, and some of these loans appear to have been loans involving Liberty Corner Capital that have now been called into question," Turner said. "At this point in time, we are unable to provide further information." If Mayer Brown played an active role in the creation of legal documents for the loans between Bennett and Liberty Corner, it certainly would lend credibility to the legitimacy of the fraudulent transactions, especially since Mayer Brown is one of the largest and well respected corporate law firms practicing securities law.