Refco futures customer calls for conversion of Chapter 11 case, payment in full of customer accounts

By Caroline Salls

Pittsburgh, Dec. 21 - Refco, Inc. commodity futures customer Michael A. McNeil asked the U.S. Bankruptcy Court for the Southern District of New York to treat all Refco entities as one, convert the Refco Chapter 11 cases to Chapter 7 and order Refco to immediately pay customers the full balance of their accounts, according to a Thursday court filing.

In his motion, McNeil said Refco, along with many of the creditors, "have purposely clouded the fact that Refco F/X Associates, LLC was dealing-brokering commodity futures contracts and options.

"They have purposely made efforts to suppress the truth of the matter in order for them to siphon off commodity futures customers' capital.

"In addition, from what is shown of Refco's filing, the company has been using customer assets in order to operate the company which was clearly fraud and clearly illegal.

"Many people are clearly going to jail for this activity."

McNeil said Refco FX has misrepresented itself as a company that is not a broker-dealer in order to avoid liquidation under Chapter 7 bankruptcy.

In addition, McNeil said Refco FX failed to register with New York State and the Commodity Futures Commissioner and has failed to follow New York State Laws to maintain customer accounts and not to commingle those assets with its own.

As a result, McNeil said Refco has committed at least 30,000 offenses against state and federal law.

"Currently, due to fraudulent misrepresentation, commodities futures customers have needlessly suffered, been deprived of the use of their assets for well over a year," McNeil said in the motion.

Refco, a New York-based commodities brokerage company, filed for bankruptcy on Oct. 17, 2005. Its Chapter 11 case number is 05-60006.

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