Inside Bawag's Refco Role

Prosecutors, meanwhile, allege that Refco helped Bawag engage in some of its own balance sheet deception. Prosecutors claim Bennett arranged for Bawag to shift up to $500 million in "worthless assets'' that the bank had incurred to accounts at Refco.

The worthless assets were part of the $1.2 billion in trading losses Bawag incurred from a series of bad investments from a hedge fund run by the son of a former bank CEO. Some of the losses were packaged into bonds sold by the Bawag through an entity called Liquid Opportunities-Plus Fund. A portion of the bond scheme was first reported by Bloomberg earlier this year.