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Ex-Refco chief seeks audit documents

NEW YORK (Bloomberg) ? Former Refco Inc. chief executive officer Phillip Bennett, charged with fraud in the company?s collapse, asked a judge to order prosecutors to turn over audit documents that are ?key? to his defence.

Gary Naftalis, a lawyer representing Bennett, asked a federal bankruptcy judge in New York this week for memos of interviews of Refco personnel prepared by Latham & Watkins, LLP, special investigative counsel for the company audit committee.

Naftalis also requested notes memoranda, minutes, e-mails and other documents related to communications with Refco?s board or audit committee since August 1, 2005.

?These documents concern key issues and a key time period in the case,? Naftalis said in his written request. ?The government should be directed to make clear what it does and does not have.?

Refco filed for bankruptcy in October after disclosing Bennett hid $430 million in debt. Bennett was charged with securities fraud and conspiracy. Prosecutors claim Bennett transferred the debt to Refco Group Holdings Inc., an entity he controlled, to improve the appearance of Refco?s finances.

Latham & Watkins was hired October 6 to investigate circumstances surrounding Refco Group Holdings Inc.?s receivables, which Naftalis says are at the core of the government?s fraud case.

In his filing, Naftalis said he has received more than one million pages of documents, ?without any meaningful indication of what information they contain.? Naftalis said he?s repeatedly asked prosecutors to explain what documents they have and are withholding.

Prosecutors haven?t acknowledged they have any Refco employee interview memos done by Latham & Watkins, Naftalis said. The government has argued it isn?t obligated to turn over any such documents under rules of evidence.

Prosecutors have also said Bennett isn?t entitled to other documents because they are statements of potential witnesses.

Prosecutors said earlier this week they may amend Bennett?s indictment to identify other victims of the fraud. Assistant US Attorney David Esseks wrote in papers that the amended indictment will ?flesh out? the identities of those who were ?defrauded by Bennett?s scheme to hide the massive and growing related-party indebtedness from various classes of investors and others.?

Naftalis, a lawyer with New York?s Kramer Levin Naftalis & Frankel, couldn?t be immediately reached for further comment.