Chicago attorney charged with fraud

NEW YORK -- A Chicago lawyer lied about the finances of Refco Inc., misleading investors who lost more than $1 billion in the financial downfall of the commodities brokerage powerhouse, a prosecutor said Tuesday.

Joseph P. Collins, 57, of Winnetka, a partner with Mayer Brown LLP, was charged in a criminal indictment with conspiracy to commit securities fraud, wire fraud, bank fraud, money laundering and with filing false documents with federal securities regulators.

The Securities and Exchange Commission also brought a civil complaint in U.S. District Court in Manhattan against Collins, who worked at the firm's Chicago and New York offices.

Collins was Refco's primary outside lawyer from 1994 to 2004 and continued to do work for Refco until October 2005, the SEC said. He brought the company with him as a client in 1994 from his previous law firm. The indictment said Collins' law firm charged the company more than $40 million in fees from 1997 through 2005.

Defense lawyer William J. Schwartz called Collins, 57, "an innocent victim of the Refco fraud."

The SEC said Collins dealt directly with the company's senior management, including its chief executive officer, Phillip R. Bennett. Bennett of Gladstone, N.J., and other former top executives have been charged criminally with conspiring to commit securities fraud. A trial was set for March.

Federal prosecutors say the executives tried to hide hundreds of millions of dollars of debt owed to Refco by a company controlled by Bennett.

The plot unraveled in October 2005, just two months after Refco went public, when Refco announced it had discovered it was owed $430 million. Refco's stock value plummeted and it was forced into bankruptcy proceedings a week later. Refco was one of the world's biggest commodities brokerages, employing some 2,400 employees in 14 countries.