NEW YORK (Bloomberg) — Refco Inc.’s former president Tone Grant was “fully briefed” on a massive fraud by his bosses, former chief executive officers Phillip Bennett and Santo Maggio, prosecutors said in a new court filing.Grant, Bennett and ex-Refco chief financial officer Robert Trosten will go on trial in October on charges that they cheated investors and defrauded banks by hiding hundreds of millions in trading losses. Prosecutors say Maggio will testify against the defendants.

In response to Grant’s bid for a separate trial, prosecutors on March 30 filed court papers outlining his role in the alleged fraud. The filing in New York federal court is the first glimpse of the evidence against Grant, who left Refco in 1999.

“Grant was fully briefed, in Refco’s offices, on the core issues of the fraud,” Assistant US Attorney David Esseks wrote. “Far from being a tangential or peripheral member of the scheme, the evidence will demonstrate that Grant was a knowing and active participant from as early as 1997.”

The US accuses Grant, Bennett and Trosten of misleading Thomas H. Lee Partners LP and other investors, including those who bought shares in Refco’s August 2005 initial public offering, by hiding hundreds of millions in trading losses. The executives made the losses look like a debt owed to Refco by an entity Bennett controlled, prosecutors say. The three pleaded not guilty.

Refco, with debt of $16.8 billion, filed the 15th-biggest bankruptcy in US history days after Bennett was arrested in October 2005. Trosten and Grant were criminally charged later.

Heavily involved in the collapse was Bermuda-based unit Refco Capital Markets Ltd.

In a March 7 court filing, Grant claimed his alleged wrongdoing is “minor” and said he was “added to the case” by prosecutors “as an afterthought.” Grant said he’d be at an unfair disadvantage if forced to stand trial with Bennett, against whom, he said, the evidence is “very powerful.”

The prosecutors disagreed. Esseks said Grant participated in discussions in October 1997 when Refco lost more than $70 million from the trading of Victor Niederhoffer and misled investors when he claimed the firm hadn’t been hurt by a market collapse.

“Grant made misrepresentations to Refco’s auditors,” Esseks wrote.

From 1999 to 2004, Grant talked to Maggio about Refco’s financial problems and the firm’s use of “customer money to cover its financial losses,” Esseks said. In May 2004, before Refco’s buyout, Bennett briefed Grant on the transaction and about the size of losses that remained hidden, Esseks said.

“Grant was not on the periphery of the fraud,” Esseks wrote. “He was a founding member and had full knowledge.”

In his March filing, Grant’s lawyer, Aitan Goelman, said there’s no evidence that Grant participated in a scheme after 1999, when he was banned from Refco’s offices. Goelman said that while the government will play for jurors taped phone calls that Maggio made to Bennett in October 2005, “no such calls were made” to Grant.

To prove Grant’s innocence, Goelman said he will argue that Grant surrendered to the government in 2006 handwritten notes that are being used to prosecute him. Grant wouldn’t have shared those notes — from his May 2004 meeting with Bennett — if he had believed he had broken the law, Goelman said.

“Before it received these two pages of notes, the government was not considering indicting Mr. Grant,” Goelman wrote.