LAWFUEL – The Legal Newswire – Mayer Brown, one of the biggest law firms in the US and two leading accountants should face legal claims over their role in alleged fraud at Refco, according to the examiner in the collapsed broker’s bankruptcy case, the Financial Times reports.
Refco’s creditors have strong claims against Mayer, Brown, Rowe & Maw, the Chicago-based law firm, together with Ernst & Young and Grant Thornton, for professional negligence, said Joshua Hochberg in his final report filed on Wednesday.
The evidence also supports a state law claim of “aiding and abetting fraud” against Mayer Brown and possibly Ernst & Young, the 416-page report said.
Mr Hochberg’s findings do not have the force of law, rather they serve as legal advice for the creditors left holding the bag when Refco filed for bankruptcy in October 2005, a week after it was revealed that Phillip Bennett, its former chief executive, had disguised a $430m debt he owed to the company.
The debt allegedly originated from client losses which had been concealed through the use of the fraudulent round trip loan scheme to present a false picture of the company’s financial health.