NEW YORK, June 5 (Reuters) - The former chief financial officer of Refco Inc avoided prison on Thursday in light of cooperation he provided prosecutors after admitting to his role in a $2.4 billion fraud that led to the 2005 collapse of the futures and commodities broker.
Robert Trosten, 44, received a sentence of time served and no probation following a hearing in New York federal court. He had been cooperating with authorities since pleading guilty in 2008 to five counts including conspiracy, securities fraud and wire fraud.
Trosten ultimately testified in three trials stemming from the unraveling of Refco after the broker disclosed an accounting deception.
At a hearing in New York, U.S. District Judge Naomi Reice Buchwald said Trosten had gone beyond what was required in his plea deal, also assisting private plaintiffs and a trustee for Refco.
"Based on these circumstances, Mr. Trosten has paid his debt to society for the crimes he has committed," Buchwald said.
She also ordered him to forfeit $2.4 billion, an amount a prosecutor acknowledged he would not be able to pay.
Prosecutors said New York-based Refco sustained hundreds of millions of dollars of losses through its own and its customers' trading.
In order to hide them, Trosten and others transferred the losses to make it appear as debt owed to Refco by a holding company that was controlled by CEO Phillip Bennett, prosecutors said.
Refco launched an initial public offering in August 2005, but two months later filed for Chapter 11 bankruptcy protection. The same day as the filing, Refco announced it had discovered it was owed a debt of about $430 million by the entity Bennett controlled.
Trosten's February 2008 plea came ahead of a trial a month later and a week after Bennett pleaded guilty to charges related to his role in the fraud at what had been the world's largest independent commodities broker. He was sentenced in 2008 to 16 years in prison.
"I'm just truly sorry for what I did," Trosten said in court Thursday.
As part of his cooperation, Trosten testified in the 2008 trial of Tone Grant, the former president of Refco. Grant was convicted on charges including conspiracy, securities fraud and money laundering and later that year was sentenced to 10 years in prison.
Trosten also testified in the two trials of Joseph Collins, a former partner at the law firm Mayer Brown accused of assisting in the fraud.
Collins was convicted on charges including conspiracy and securities fraud in 2012 and sentenced last year to a year in prison. He is appealing.
If Collins wins a new trial, Trosten may be asked to testify again, Assistant U.S. Attorney Harry Chernoff said in court.
Prosecutors had also obtained a guilty plea from Santo Maggio, Refco's former executive vice president. Maggio died in 2012.
The case is U.S. v. Bennett, U.S. District Court, Southern District of New York, No. 05-01192.
(Reporting by Nate Raymond in New York, additional reporting by Jon Stempel; editing by G Crosse)