MANHATTAN (CN) - Tone Grant, former owner of Refco, was convicted Thursday of defrauding investors in the $2.4 billion collapse of the derivatives and commodity brokerage. Grant faces up to 85 years on five federal counts: conspiracy, wire fraud, bank fraud, securities fraud and money laundering.
Grant, 64, of Chicago, owned Refco along with Phillip Bennett, who pleaded guilty in February. They hid hundreds of millions of dollars in trading losses during the 1990s by juggling the books and claiming Refco owed the money to Refco Group Holdings (RGHI).
The frauds unraveled when Thomas H. Lee Partners bought a majority interest in Refco in 2004, in a $1.9 billion leveraged buyout. Refco sold $600 million in bonds to the public and borrowed $800 million from banks for this. A year later, it sold another $580 million in stock in an initial public offering.
Grant made $16 million in the buyout, plus half the profits if Bennett sold any of his Refco stock, which briefly was worth $275 million.
When the book-juggling with RGHI came to light, in October 2005, Refco stock tanks, its stock was delisted from the New York Stock Exchange, and the company declared bankruptcy.
Grant will be sentenced on Aug. 7 by U.S. District Judge Naomi Reice Buchwald.
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