LAWFUEL – The Law Newswire – A Boston-based buyout firm is suing Mayer Brown Rowe & Maw for $245 million in damages for allegedly helping Refco Inc defraud investors.
Thomas H. Lee Partners, a closely held buyout firm, sued Mayer, Brown over the law firm’s representation of the defunct futures trader Refco Inc Bloombergs report.
In the lawsuit, filed yesterday in federal court in Manhattan Thomas H. Lee Partners claims at least $245 million in damages.
The suit is “part of our continuing effort to aggressively pursue claims against the parties responsible for defrauding us,” Thomas H. Lee Partners said in a statement today. “We also intend to file a claim against Grant Thornton, Refco’s auditor, and are actively evaluating potential claims against other parties.”
Thomas H. Lee Partners claims that Chicago-based Mayer Brown violated U.S. securities and racketeering laws by helping Refco hide a series of related-party transactions from February 2000 to August 2005, two months before the company declared bankruptcy.
The suit follows a report this month by a bankruptcy examiner who found that Mayer Brown and Refco’s accountants could face professional negligence claims over their work for the company. The bankruptcy trustee overseeing the Refco case said he plans to seek $1 billion from accounting firms and law firms that may have contributed to the trader’s collapse.
Mayer Brown said in a statement that the suit is “without merit” and that the firm will “defend the lawsuit vigorously.” The firm has more than 1,500 lawyers worldwide.
Refco filed the 15th-largest bankruptcy in U.S. history in 2005, a week after disclosing that former Chief Executive Officer Phillip Bennett concealed $430 million in company debt. Thomas H. Lee Partners claims Mayer Brown knew of so-called round-trip loans used by Refco to hide debt and helped conceal the information.
“Mayer Brown’s conduct here goes well beyond the zealous representation of a client,” Thomas H. Lee Partners claimed in the complaint.