Legal News

Breaking: Partial Verdict in Trial of Ex-Refco Lawyer, Joseph Collins

By Jennifer Forsyth

Looks like juries and judges alike are eager to start their New York City weekend. After 3 days of deliberation, a jury convicted Frederic Bourke, of Dooney & Bourke handbag fame, of charges related to foreign corruption. (See our LB post from earlier today.) In Brooklyn, former Morgan Stanley stock lending supervisor Darin Demizio was just sentenced to 38 months in prison, followed by 3 years supervised release, for his conviction in a kickback case involving stock lending on Wall Street. And in Manhattan, a jury just convicted former Refco lawyer Joseph Collins on fraud and conspiracy charges–but deadlocked on other counts–after several days of deliberations that included a moment in which one juror threatened to cut another’s finger off.

Prosecutors accused the former Mayer Brown partner of having knowledge of the Refco scam that cost investors $2.4 billion. (For previous LB coverage of Collins click here, here, and here.) Collins was found guilty of conspiracy, two counts of securities fraud and two counts of wire fraud. A mistrial was declared on nine other counts.

Prosecutors from the U.S. Attorney’s office in Manhattan had alleged that Collins was a key player in helping former Refco Chief Executive Phillip R. Bennett and others hide the commodity broker’s dismal financial picture, including hundreds of millions of dollars of undisclosed debt, according to reporting just in by Dow Jones Newswire’s Chad Bray. Bennett pleaded guilty to securities fraud and other charges last year.

The government had alleged that Collins helped Bennett and others engage in transactions that transferred losses and certain expenses off Refco’s books to Refco Group Holdings Inc., a company controlled by Bennett and others. The government said Collins made $40 million for his law firm as Refco’s outside lawyer and that gave him incentive to lie, starting in 1997.

However, Collins’ lawyer, William Schwartz of Cooley Godward Kronish LLP, has said Collins believed he was doing honest legal work and was kept in the dark by Bennett and others at the company.

Mayer Brown has previously said it was cooperating fully with prosecutors.

Deliberations appeared to have become heated earlier this week when a male juror sent a note to the court indicating a female juror had threatened to cut off his finger and told him her husband would “take care of you.”

Afterwards, jurors said the acrimony was between the two jurors, as one was annoyed by the other pointing his finger at people when he talked. For the most part, deliberations were uneventful, they said.

“Nobody got hurt. There was no bloodshed,” said one juror who refused to give
her name. “It’s not easy to decide someone’s fate.” They said the jury was deadlocked 11-1 on the remaining nine counts, and the juror who complained to the court was the holdout.

Full post as published by Law Blog - WSJ.com on July 10, 2009 (boomark / email).