Former Refco president Tone Grant has been sentenced to 10 years in prison for his part in the $2.4 billion defrauding of private equity firm Thomas H Lee Partners.
Grant, 64, faced the possibility of life in prison after his conviction in Manhattan federal court in April on felony counts of securities fraud, wire fraud, bank fraud, money laundering and conspiracy. Grant’s lawyers are planning to appeal the conviction.
Grant was the only executive of the now infamous commodities brokerage to stand trial.
Former chief executive Phillip Bennett, pegged by prosecutors as the mastermind behind the accounting scandal, pled guilty in February to 20 criminal counts and last month was sentenced to a 16-year prison term. Former executive vice president Santo Maggio reached a plea agreement in December 2007, forfeiting $23 million.
Boston-based TH Lee took Refco public in 2005 for $22 per share, nearly tripling the value of its initial investment. However, later that year TH Lee discovered that a holding company owned by Grant and Bennett owed Refco roughly $430 million in debt.
It was subsequently revealed that Grant, Bennett and other Refco executives had since 1999 been masking hundreds of millions of dollars in trading losses by transferring them to the holding group.
After watching its stock price plummet and client base flee, Refco filed for Chapter 11 bankruptcy protection in October 2005. A consortium led by financial services specialist JC Flowers purchased the embattled firm for $768 million.
TH Lee lost roughly $245 million in the debacle.
Grant reaped $16 million in proceeds from the leveraged buyout. It was unknown at press time whether in addition to the 10 year sentence Grant was required to pay restitution penalties.