Bennett pleaded guilty to fraud, conspiracy and money laundering in a Manhattan federal court. U.S. District Judge Naomi Buchwald has not formally accepted the plea.
Bennett had been scheduled to stand trial March 17, along with former Refco President Tone Grant and Chief Financial Officer Robert Trosten. Grant joined Refco in Chicago in 1981 and oversaw day-to-day operations with Bennett during his tenure, which ended in 1998.
Prosecutors said Bennett faces life imprisonment, with a maximum penalty of 315 years. His sentencing was scheduled for May 20. He had been free on bail since his arrest in October 2005, but prosecutors asked the judge Friday to take Bennett into custody.
According to Bloomberg News, Bennett's voice cracked when he addressed the judge.
"I take full responsibility for my conduct," he said. "I wish to publicly apologize to my family and to all those I've harmed."
Bennett's guilty plea turns up the pressure on Grant and Trosten, as well as Chicago lawyer Joseph Collins, who was indicted on fraud and conspiracy charges in a related case in December. Grant, Trosten and Collins have all pleaded not guilty. Collins, a partner at Mayer Brown, was Refco's main outside lawyer for a decade starting in 1994.
Lawyers for Trosten and Grant could not be reached for comment. William Schwartz, Collins' lawyer, declined to comment.
Earlier Friday, Dow Jones Newswires quoted Aitan D. Goelman, a lawyer for Grant, as saying his client "is innocent and looks forward to proving that at trial."
Government prosecutors say the former Refco executives misled investors by masking losses that first emerged among its clients during the Asian financial crisis. The firm, which moved to New York in the 1990s, shuffled more than $1 billion in debt off its books to a holding company that Bennett controlled.
Prosecutors say Refco used this scheme to deceive Boston-based buyout firm Thomas H. Lee, which bought a 57 percent stake in the brokerage in 2004. Investors also were unaware of the hidden losses when Refco held a $583 million initial public offering in 2005, prosecutors alleges.
Two months after going public, the firm disclosed that a Bennett-controlled entity owed it hundreds of millions of dollars. Refco subsequently filed for bankruptcy.
Credit : chicago tribune