British high-flyer held in $430m US fraud inquiry
Saturday 15 October 2005
That was before the 57-year-old chief executive of Refco, one of the world's biggest futures brokers, became the central figure in one of the most spectacular financial scandals to hit New York since Enron. He faces a 20-year prison sentence and Refco stands on the brink of bankruptcy
Mr Bennett is accused of orchestrating the type of complex fraud which another Briton, Nick Leeson, was found guilty of in 1995, and which brought down Barings Bank. In a dramatic statement that appalled New York's business classes, Refco announced on Monday that its chief executive owed it $430m and admitted that company statements dating back to 2002 could not be trusted.
Refco is one of the largest commodities and derivatives traders in New York, London, Paris and Asia. Investors are queuing up with lawsuits alleging they have been grossly misled about the state of its finances.
Having been arrested, Mr Bennett is absent from the drama as it plays out in New York's downtown financial district. He has been confined to his penthouse and electronically tagged to prevent him leaving the city. Bail was set at $50m. It is alleged more than $500m of bad debts at Refco was hidden from investors by Mr Bennett, who is accused of shifting losses around the company using opaque offbalance sheet transactions.
Mr Bennett's lawyer, Gary Naftalis, said in a court hearing on Wednesday that the authorities had "jumped the gun" by arresting Mr Bennett - a view not shared by the federal prosecutors who arrested him on Tuesday night because they feared he was a "flight risk".
David Esseks, a government lawyer, said that just as the devastating announcement was about to be made, Mr Bennett was heard on tape saying he was going to Europe in two days. "That's what prompted us to act as quickly as we did," said Mr Esseks.
Mr Bennett, who is married with two children, has made a name for himself as a philanthropist.
By the 1970s he had a job at Chase Manhattan Bank and joined Refco in 1981, building it into the world's biggest independent broker in futures. He became its chief executive in 1998.
By the summer of 2005, Mr Bennett and a list of blue-chip investment banks, including Goldman Sachs and Credit Suisse First Boston, thought it was ready for a flotation on the New York Stock Exchange.
Mr Bennett retained a stake of about 34 per cent, which was worth $1.6bn until last week. It has since plummeted to less than half that amount. Mr Bennett's reputation looks to have suffered just as badly.
musicBlack Sabbath have pulled off one of rock music’s great comebacks – against all odds
interviewHer estate has become the nation's glossiest food empire
theatreTheatre's hitmaker Daniel Evans on 'Oliver' and bringing 'The Full Monty' to the stage
food + drinkMichelin-starred Tom Sellers on being this year's hottest property
tvParents (and kids) rejoice! A new wave of fantastic family entertainment is here
booksGeese, gorillas, grandads... and growing up
food + drinkHow one grocery e-tailer is gearing up for the Yuletide rush
food + drink
food + drinkFestive snacks don't have to be fiddly, says Bill Granger
Hundreds arrested as Canadian police smash worldwide paedophile ring
Nelson Mandela: 11 inspirational quotes to live your life by
Ja Rule forced to deny leaving wife for prison cell mate
The 'terrorist' and the Tories: What did Nelson Mandela really think of Margaret Thatcher?
Crash pilot who threatened Ukip leader Nigel Farage found dead
- 1 Hundreds arrested as Canadian police smash worldwide paedophile ring
- 3 People will try to reduce Mandela to a lilting reggae tune about ‘love’. They will fail
- 4 Why Barcelona chose Everton to educate their latest prodigy
- 5 Back from the dead? Family Guy's Brian Griffin 'to make a comeback' after fan petition
- < Previous
- Next >
£30000 - £45000 per annum + Benefits: Harrington Starr: C# .NET Server Side De...
£50000 - £60000 per annum + Benefits: Harrington Starr: C# ASP.NET Developer (...
£60000 - £65000 per annum + Benefits: Harrington Starr: Senior C# WPF .NET Dev...
Negotiable: Harrington Starr: QA Manual Tester FX Trading Platform/Derivative...