British man charged with US securities fraud

The ousted British-born chief executive of commodities brokerage firm Refco has been released from a US jail on a $50m (€41.8m) bond following his arrest for alleged securities fraud.

Authorities say Phillip Bennett, now of Gladstone, New Jersey, concealed as much as $545m (€455.6m) in bad debts from federal regulators and investors.

Bennett was arrested on Tuesday night and released yesterday. He was charged in a criminal complaint unsealed in US District Court in Manhattan, US Attorney Michael Garcia said.

On Monday, Refco announced that $430m (€359.5m) in debts to the company, funnelled through a firm controlled by the ousted chairman and chief executive, was hidden through a number of secret transfers to disguise that much of the debt may have been uncollectable.

In court, Assistant US Attorney David Esseks fought bail, calling Bennett a flight risk, a British citizen with $500m (€418.2m) in assets who told a colleague in a tape conversation on Monday that he was going to Europe within two days.

US Magistrate Judge Douglas F. Eaton granted bail, saying he could go free yesterday after pledging a Manhattan apartment and his New Jersey home as collateral and agreeing to electronic monitoring, a $50m (€41.8m) bond with $5m (€4.2m) dollars in cash.

Esseks said prosecutors had developed a “straightforward and truly extraordinary case” that involved a “staggering” loss of money for investors.

But defence lawyer Gary Naftalis said “there’s no case here.” He said his client had already pledged his shares in Refco to secure a bank loan that repaid the $430m (€359.7m) loan with interest on Monday.

“He received no personal profits from this,” Naftalis said.