White Collar Crime Follies

The blood is flowing nicely in the country’s financial markets today. Yesterday, officials with the Manhattan US attorney’s office and the New York office of the Security and Exchange Commission filed charges against attorney Joseph Collins, a partner at Mayer Brown, for allegedly conspiring to commit securities fraud on a massive scale.

The charges stem from the 2005 collapse of the Chicago futures brokerage firm Refco, which was valued at $3.5 billion the day after it went public. Ah, but then there was the little matter of $430 million in debt investors didn’t know about.

Within weeks of the IPO, the liabilities were revealed in an internal audit, and the company filed for bankruptcy. The feds charged Refco chief executive Phillip Bennett with securities fraud, alleging that he hid the $430 million in losses in financial transactions with a hedge fund. Now, they’ve added Bennett’s lawyer to the dock, claiming that Collins knowingly participated in the fraud.

After the indictment was announced, Mayer Brown issued a statement in which officials promised that the company has fully cooperated with the investigation, and Collins is on leave until this affair is resolved. Indeed, if you try to read Collins’ profile at Mayer Brown’s web site, you get a simple message: “This resume is not currently available. Please try again later.”

Yeah, like in ten years.