MANHATTAN (CN) – Two former Refco board members settle a civil forfeiture complaint by turning over $39 million in assets. Edwin Cox and William Graham, both of Texas, spent 9 and 4 months, respectively, as Refco directors in 1998 and 1999.
Prosecutors traced their assets and trusts to fraud that Refco executives committed as the company prepared for a leveraged buyout.
Prosecutors say Refco co-founder Thomas Dittmer paid Cox, 63, $39 million in August 2004 to resolve Cox’s claim to proceeds of the 2004 buyout in which Thomas H. Lee Partners paid $1.9 billion for a majority stake in Refco.
Refco went bankrupt a year after the buyout, and announced that CEO Phillip Bennett had covered up $430 million in debts from shareholders.
Bennett is serving a 16-year prison sentence for securities fraud.
Cox is the beneficiary of the EKC Grantor Trusts 2000, of which Graham, 61, is the grantor, along with the WUG Grantor Trusts 2000.