Or so claims an attorney for Liberty Corner Capital Strategies, the New Jersey-based hedge fund that has been aledged to have assisted Refco CEO Phillip Bennett in his efforts to obscure the futures brokerage's mounting debts. Liberty attorney Kevin Marino claims that because of Mayer, Brown, Rowe & Maw's involvement the hedge fund never questioned the legitimacy of the transactions. Mayer was also one of the law firms involved in Refco's $583 billion IPO of a few months previous.

Via Matthew Goldstein at TheStreet.com:

"Marino, interviewed Monday outside of Liberty Corner's offices in Summit, N.J., says his client was a prime brokerage customer of Refco and never had any direct dealings with Bennett. His client did not know that Refco Group was a separate company owned by Bennett. In fact, Marino says his client voluntarily called the office of U.S. Attorney Michael Garcia after seeing Liberty Corner's name mentioned in a story last Wednesday in The Wall Street Journal...

...A Mayer Brown spokeswoman, Sheila Turner, described the firm's role in the IPO as limited. Regarding the loans, Turner said Mayer Brown is still gathering information on the matter. "Based on our investigation to date, it appears that lawyers in our firm from time to time documented loans for Refco, and some of these loans appear to have been loans involving Liberty Corner Capital that have now been called into question," Turner said. "At this point in time, we are unable to provide further information..."

...Not everyone is buying Liberty Corner's version of the events. One Wall Street analyst, who didn't want to be identified, says the transaction looks suspicious on its face. Even if Liberty Corner didn't know Bennett controlled Refco Group, the movement of so much cash between two similarly named entities should have set off alarm bells. In fact, investors in the August IPO were on notice that Refco had done at least one prior transaction with Bennett's Refco Group...

For further details on the tangled Refco web, check out the full article at TheStreet.com.

-- MDT

Labels: Phillip Bennett, Refco