| NEW YORK, June 5
NEW YORK, June 5 The former chief financial
officer of Refco Inc avoided prison on Thursday in light of
cooperation he provided prosecutors after admitting to his role
in a $2.4 billion fraud that led to the 2005 collapse of the
futures and commodities broker.
Robert Trosten, 44, received a sentence of time served and
no probation following a hearing in New York federal court. He
had been cooperating with authorities since pleading guilty in
2008 to five counts including conspiracy, securities fraud and
Trosten ultimately testified in three trials stemming from
the unraveling of Refco after the broker disclosed an accounting
At a hearing in New York, U.S. District Judge Naomi Reice
Buchwald said Trosten had gone beyond what was required in his
plea deal, also assisting private plaintiffs and a trustee for
"Based on these circumstances, Mr. Trosten has paid his debt
to society for the crimes he has committed," Buchwald said.
She also ordered him to forfeit $2.4 billion, an amount a
prosecutor acknowledged he would not be able to pay.
Prosecutors said New York-based Refco sustained hundreds of
millions of dollars of losses through its own and its customers'
In order to hide them, Trosten and others transferred the
losses to make it appear as debt owed to Refco by a holding
company that was controlled by CEO Phillip Bennett, prosecutors
Refco launched an initial public offering in August 2005,
but two months later filed for Chapter 11 bankruptcy protection.
The same day as the filing, Refco announced it had discovered it
was owed a debt of about $430 million by the entity Bennett
Trosten's February 2008 plea came ahead of a trial a month
later and a week after Bennett pleaded guilty to charges related
to his role in the fraud at what had been the world's largest
independent commodities broker. He was sentenced in 2008 to 16
years in prison.
"I'm just truly sorry for what I did," Trosten said in court
As part of his cooperation, Trosten testified in the 2008
trial of Tone Grant, the former president of Refco. Grant was
convicted on charges including conspiracy, securities fraud and
money laundering and later that year was sentenced to 10 years
Trosten also testified in the two trials of Joseph Collins,
a former partner at the law firm Mayer Brown accused of
assisting in the fraud.
Collins was convicted on charges including conspiracy and
securities fraud in 2012 and sentenced last year to a year in
prison. He is appealing.
If Collins wins a new trial, Trosten may be asked to testify
again, Assistant U.S. Attorney Harry Chernoff said in court.
Prosecutors had also obtained a guilty plea from Santo
Maggio, Refco's former executive vice president. Maggio died in
The case is U.S. v. Bennett, U.S. District Court, Southern
District of New York, No. 05-01192.
(Reporting by Nate Raymond in New York, additional reporting by
Jon Stempel; editing by G Crosse)