* Money to go to Refco victims
* Settlement resolves civil forfeitures complaint
By Jonathan Stempel
NEW YORK, May 7 Two former Refco Inc directors
have agreed to forfeit $39 million that prosecutors said is
traceable to fraud at the now defunct futures and commodities
Edwin Cox, 63, and William Graham, 61, agreed to the
forfeiture to resolve a civil forfeiture complaint filed on
Thursday, U.S. Attorney Preet Bharara in New York said.
Cox, a resident of Athens, Texas, was a Refco director from
Sept. 1998 to June 1999, while Graham, a Dallas resident, was
on the board from April to August 1999, prosecutors said.
Prosecutors said the $39 million was awarded to resolve a
dispute over how to distribute the proceeds of a 2004 leveraged
buyout in which private equity firm Thomas H Lee Partners LP
[THL.UL] paid $1.9 billion for a majority stake in Refco.
Steven Kobre, a lawyer representing Cox, declined to
comment. Marc Weinstein, who represents Graham, did not
immediately return a call seeking comment.
Refco and 23 affiliates filed for Chapter 11 protection
from creditors in October 2005.
The filing came two months after the New York-based
brokerage raised $583 million in an initial public offering and
one week after it revealed that onetime Chief Executive Phillip
Bennett hid $430 million of debt.
While Refco's fraud did not surface until that October,
prosecutors believe it began as early as the mid-1990s. The
bankruptcy remains one of the largest in U.S. history.
Several onetime Refco executives entered guilty pleas or
were convicted for their participation in the company's
Bennett pleaded guilty to securities fraud and other
charges and is serving a 16-year prison sentence. Former
President Tone Grant, the only top Refco executive to stand
trial, is serving a 10-year prison term.
Bharara said the proceeds of Cox's and Graham's forfeiture
will go to victims of Refco's fraud. Neither Cox nor Graham
admitted wrongdoing in agreeing to settle.
The civil forfeiture case is U.S. v. $35,100,000 in United
States Currency et al, U.S. District Court, Southern District
of New York, No. 10-03743.
(Reporting by Jonathan Stempel; editing by Andre Grenon)