Ex-Refco executive Maggio pleads guilty to fraud

NEW YORK Wed Dec 19, 2007 2:23pm EST

NEW YORK (Reuters) - A former senior Refco Inc executive pleaded guilty on Wednesday to criminal charges for his role in an alleged fraud that led to the collapse of the futures and commodities broker.

Santo Maggio, 56, who was president of the Refco Capital Markets unit, pleaded guilty to four counts -- two counts of securities fraud, one count of conspiracy and one count of wire fraud -- at a hearing before Magistrate Judge Ronald Ellis in Manhattan federal court.

Separately, the U.S. Securities and Exchange Commission said in a related action it had settled a civil lawsuit against Maggio.

Refco and 23 affiliates filed for Chapter 11 bankruptcy protection on October 17, 2005, a week after revealing that former Chief Executive Phillip Bennett had hidden $430 million of bad customer debt. It later liquidated its operations.

Maggio told the judge that Refco's losses were covered up.

"I participated with others to hide the true financial health of Refco," he said. "I deeply regret my conduct and the harm that it has caused."

He faces a maximum sentence of 65 years for the charges. He is scheduled to be sentenced on May 9.

The plea comes a day after prosecutors, along with the U.S. Postal Inspection Service and the Securities and Exchange Commission, filed charges against Joseph Collins, a former outside lawyer for Refco.

Separately, Bennett, former Chief Financial Officer Robert Trosten and former President Tone Grant are awaiting trial on conspiracy, fraud and other charges. Their trial is expected to begin in March.

Maggio agreed to cooperate fully with U.S. authorities in their investigation of fraud at the company.

His lawyer, Paul Shechtman, said after the hearing that Maggio would likely testify if called to do so at the trial of the other executives facing criminal charges.

As part of plea agreement, Maggio would also be required to forfeit about $23 million, Shechtman said.

"Mr. Maggio today accepted responsibility for his criminal conduct," Shechtman said. "This is the first step towards making amends for it."

The SEC said that Maggio, without admitting or denying the allegations in the civil complaint, had agreed to a proposed judgment that would among other things prohibit him from serving as an officer of a public company.

(Additional reporting by Martha Graybow; Editing by Maureen Bavdek and Dave Zimmerman)

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