NNEW YORK (Bloomberg) ? Robert Trosten, the former chief financial officer of bankrupt futures trader Refco Inc., told a judge he is innocent of charges that he defrauded investors of more than $1 billion.

Trosten, 37, who was indicted on Tuesday, entered a not guilty plea yesterday before US District Judge Naomi Reice Buchwald in New York. Refco?s former chief executive officer, Phillip Bennett, who was charged last year in the case, also told Buchwald he was innocent of new charges unsealed yesterday.

Prosecutors say Trosten, of Sarasota, Florida, helped Bennett, 58, hide hundreds of millions of dollars owed to Refco by a company that Bennett controlled. Hiding the debt may have helped Refco appear more financially sound as it prepared for an initial public offering in August 2005, prosecutors say.

From the mid-1990s, Refco sustained millions of dollars in losses through its own and its customers? trading. To hide the losses, Bennett transferred them to his holding company, Refco Group Holdings Inc., prosecutors said.

The trial is scheduled for March 12. Trosten?s lawyer, Robert Morvillo, said he plans to request a separate trial for his client. Buchwald said she may postpone the trial for a month to allow Morvillo to review millions of documents that must be turned over to the defence.

Before the end of each quarter, Bennett, with Trosten?s help, directed transactions that converted the debt owed to Refco by Bennett?s company into a debt owed to Refco by a Refco customer, prosecutors said. The transactions were unwound after the quarter ended.

Bennett and Trosten used the scheme to defraud purchasers of $600 million in notes issued by Refco in 2004, the indictment said. Bennett is also accused of cheating investors in $585 million of Refco?s stock when the company went public.

Bennett disclosed on October 10, 2005, that he owed Refco $430 million and was arrested the next day. Refco put out a press release disclosing the debt, and customers began withdrawing funds from their accounts. Refco eventually froze some accounts and later claimed the cash and securities in those accounts was company, not customer, property.

Refco filed the 15th-biggest bankruptcy in US history on October 17, 2005. Refco owes creditors about $16.8 billion.

Trosten left Refco in October, 2004 after two years as finance chief.