Letter of Apology » Accounting Fraud

Kaplan Refuses To Dismiss Indictment Of Remaining Stein Defendants

Dave Westheimer — Tue, 16 Sep 2008 06:10:48 +0000

Following the Second Circuit’s August 28 ruling in US v. Stein (earlier), four defendants remain: former Sidley Austin LLP law partner R. J. Ruble and former KPMG LLC partners David Greenberg, John Larson and Robert Pfaff. On September 10 US District Judge Lewis Kaplan denied (.pdf) their motion to dismiss the indictment on grounds of denial of due process (h/t White Collar Prof Blog).

Jamie Olis Sues Dynegy For Defense Costs

Dave Westheimer — Wed, 10 Sep 2008 05:59:08 +0000

The Houston Chronicle reports that convicted former Dynegy executive Jamie Olis on Monday filed suit in Delaware Chancery Court seeking more than $600,000 in defense costs. Is it coincidental that the filing comes less than two weeks after the Second Circuit affirmed Judge Kaplan’s rulings in US v. Stein?

Former Refco President Grant Sentenced To 10 Years In Prison

Dave Westheimer — Fri, 08 Aug 2008 05:52:46 +0000

In Manhattan on Thursday, US District Judge Naomi Reice Buchwald sentenced former Refco Inc. President Tone N. Grant to 10 years in prison for his role in the October 2005 collapse of the company which caused investor and partner losses estimated at $2.4 billion. A jury convicted Grant in April on one count each of conspiracy, securities fraud, wire fraud, bank fraud and money laundering. Grant’s attorneys plan to appeal his conviction (Bloomberg, Reuters). Our previous Refco entries are here.

Jamie Olis Update: Lake Denies Recusal Motion

Dave Westheimer — Mon, 04 Aug 2008 04:58:58 +0000

The Chronicle’s Mary Flood reported Friday that US District Judge Sim Lake has denied Jamie Olis’ recusal motion (earlier here and here ), which was requested because Lake and the late USA Mike Shelby went to the same schools, served in the military and worked at the same law firm (all at different times) and that Lake swore in Shelby. In denying the motion, Lake ruled that the request was filed too late and wrote, “Olis does not point to any evidence showing that any of the court’s prior rulings in this case are based on an extrajudicial source or that they exhibit the degree of favoritism or antagonism required to warrant recusal.”

Refco’s Bennett Will Appeal Sentence

Dave Westheimer — Wed, 30 Jul 2008 05:59:31 +0000

Former Refco Chairman and CEO Phillip Bennett, who was sentenced to 16 years in prison on July 3, will appeal his sentence — not his conviction — to the the US Court of Appeals for the Second Circuit. Bennett pleaded guilty in February to conspiracy, wire fraud, bank fraud, money laundering and making false SEC filings in connection with the October 2005 collapse of the company which caused investor and partner losses estimated at $2.4 billion (Reuters).

Refco’s Bennett Sentenced To 16 Years In Prison

Dave Westheimer — Thu, 03 Jul 2008 17:27:56 +0000

US District Judge Naomi Reice Buchwald has sentenced former Refco Chairman and CEO Phillip Bennett to 16 years in prison. Bennett pleaded guilty in February to conspiracy, wire fraud, bank fraud, money laundering and making false SEC filings in connection with Refco’s 2005 collapse which cost investors an estimated $2.4 billion. Bennett will begin serving his sentence on September 4 and will be under house arrest until then (Reuters via Yahoo News).

Refco’s Bennett Seeking Sentence Similar To Milken

Dave Westheimer — Sat, 21 Jun 2008 18:14:24 +0000

Sentencing for former Refco Chairman and CEO Phillip Bennett is now rescheduled (again) for July 3 before US District Judge Naomi Reice Buchwald in Manhttan. Bennett pleaded guilty in February to conspiracy, wire fraud, bank fraud, money laundering and making false SEC filings (earlier). Prosecutors are seeking a sentence in the same range as the 25 year sentence of former WorldCom CEO Bernie Ebbers. Bennett’s attorneys are asking for a non-guidelines sentence in the range of the 10 year sentence former Drexel Burnham Lambert junk bond ace Michael Milken received, noting Bennett’s cooperation with shareholders in their civil suit (New York Law Journal).

Trial Date Set For Refco Attorney Collins; Bennett Sentencing Next Week

Dave Westheimer — Thu, 12 Jun 2008 06:52:24 +0000

In Manhattan on Tuesday, US District Judge Leonard Sand set a trial date of April 6, 2009 in the case of Joseph Collins, former longtime attorney for Refco Inc. Collins was indicted in December 2007 on 11 counts including conspiracy, securities fraud, wire fraud, bank fraud and making false statements to the SEC. The charges arose in connection with the October 2005 collapse of the company which caused investor and partner losses estimated at $2.4 billion. Collins, a partner at Mayer Brown LLP in Chicago, is accused of creating fraudulent documents to help hide Refco’s losses from investors, auditors and and Thomas H. Lee Partners, which had purchased a majority interest in Refco (Reuters).

Former Refco Chairman and CEO Phillip Bennett and CFO Robert Trosten pleaded guilty in February, and former President Tome Grant was convicted by a jury in April. Bennett’s sentencing, originally scheduled for May 20, has been moved to June 19; the New York Law Journal recently reported that Bennett has been cooperating with shareholders in their civil suit; these are the same investors he has admitted defrauding, and he is a defendant in that suit. US District Judge Naomi Reice Buchwald, who will sentence Bennett, has been informed of his cooperation; he faces a possible maximum of 315 years in prison.

Olis Makes Formal Recusal Motion

Dave Westheimer — Wed, 07 May 2008 07:27:40 +0000

Since US District Judge Sim Lake refused to answer last week’s private letter from attorney Lloyd Kelley asking him to recuse himself and gave the letter to the USAO instead (earlier), attorneys for convicted former Dynegy executive Jamie Olis on Tuesday filed a recusal motion in US District Court in Houston.

The Houston Chronicle/AP story notes that Olis is scheduled for release in August 2009. Due to the repeated and obstinate delays by the both the USAO and Lake, we would be surprised if the appeals process is completed by then.

Olis Replies To Government’s §2255 Answer

Dave Westheimer — Tue, 06 May 2008 07:58:13 +0000

Attorneys for convicted former Dynegy executive Jamie Olis on Friday filed a Response to the government’s answer to his §2255 Motion To Vacate. From the Introduction:

The government’s Answer starts with the cynical assertion that Olis should suffer a procedural default because the United States Attorney’s Office (“USAO”) successfully deceived Olis and his attorneys by concealing its interference with Olis’s lawful access to defense funding. From there, the Answer devolves downward. Contrary to the government’s contentions, the record establishes that (1) the USAO violated Olis’ fundamental rights by interfering with his access to defense funding; (2) the government constructively and impermissibly amended the indictment; (3) the government presented false testimony from Jeffrey Heil, a key government witness; (4) the petit jury included an admittedly biased and unrehabilitated juror; (5) the jury instructions erroneously defined the elements of wire fraud and mail fraud; and (6) Olis received ineffective assistance of counsel.

The response also asks for reconsideration of his motion for discovery in connection with the §2255 motion; US District Judge Sim Lake denied the motion for discovery in March. Also pending is last week’s request by Olis’ attorney Lloyd Kelley that Lake recuse himself.