Federal prosecutors are considering filing a revised indictment in the accounting fraud case against former
CEO Phillip Bennett.
Government lawyers said Friday they are moving toward filing a so-called superseding indictment against Bennett. Prosecutors disclosed the potential new indictment in a court filing in Manhattan federal court.
The superseding indictment will "flesh out'' the list of "investors and others'' defrauded by Bennett, as part of a scheme to conceal hundreds of millions of dollars of trading losses rung up by customers of the now-bankrupt commodities and derivatives brokerage, prosecutors said.
Prosecutors, in the filing, gave no time table for the new indictment. But ever since Bennett's indictment last November, prosecutors have continued to investigate the alleged 10-year fraud.
Legal observers have been expecting a new indictment in the case. But the government's disclosure Friday was the first official confirmation that such an event is now likely.
Bennett's attorney, Gary Naftalis, declined to comment.
In criminal investigations, prosecutors often file a superseding indictment when there are either new charges to file against a defendant, or new parties to add as defendants.
In the court filing, prosecutors did not say whether they intend to ask a grand jury to indict additional defendants. But the filing acknowledges that Bennett worked with an unidentified number of co-conspirators. The government says it can't identify those people now, because it is still "determining the scope of the conspiracy.''
reported that Bennett's former top deputy, Santo Maggio, had begun cooperating with prosecutors several days before Bennett was arrested in October.
also reported that Maggio had secretly tape recorded a phone conversation he had with Bennett on the same day that Refco disclosed the alleged debt-hiding scheme.
The filing by prosecutors was included in a motion opposing a request by Bennett's lawyers for more information about the case against the former Refco chief executive. Bennett's lawyers are asking the trial judge to order prosecutors to provide more details about the case.
Bennett's attorneys contend they are having a difficult time preparing defense because prosecutors have overwhelmed them with potential documentary evidence. To date, prosecutors have gathered 1.3 million pages of documents, some as old as 20 years.
"The sheer volume and scope of the government's document production have left the defense uncertain how broad these charges might be,'' Bennett's lawyer wrote, in an earlier filing in the case.
One thing prosecutors are paying a lot of attention to is Bennett's relationship with Austria's Bank Fur Abeit und Wirtchaft, or Bawag, which once had a minority equity stake in Refco. Court filings show prosecutors are focusing on "tax issues'' involving Bawag and Refco Group Holdings Inc., the entity that authorities allege Bennett used to conceal up to $720 million in bad customer debts.
Some of the documentary evidence turned over by prosecutors to Bennett's attorneys include "emails and other electronic documents'' referring to Bawag.