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Jonathan Weil at Bloomberg:

“Crime didn’t pay for Joseph Collins, a former corporate lawyer who received a seven-year prison sentence in January for securities fraud.

Collins, a former partner at the law firm Mayer Brown LLP, was the chief outside counsel for Refco Inc. when the futures- trading firm collapsed in October 2005, two months after its initial public offering. He was convicted last July on five felony counts for helping Refco executives fleece the company’s investors and lenders of $2.4 billion. Yet Collins, 60, hasn’t been forced to pay compensation to anyone who lost money when Refco went bust.

That’s mainly because Congress has made sure only the government has the right to bring civil court claims against defendants for aiding and abetting securities fraud. Private litigants are barred from doing so under federal law. That means outside investors typically have no means to seek redress in such cases, unless prosecutors or regulators choose to pursue restitution for them. As for the Collins case, the government has proved worthless in that respect.

Last week, the Securities and Exchange Commission settled its own civil complaint against Collins. His deal included no monetary penalties. His only punishment was a court order barring him from violating the securities laws’ anti-fraud provisions in the future. He also was allowed to settle the suit without admitting or denying the SEC’s allegations, an absurd formality considering he’s already been found guilty of a crime.

Investors aren’t slated to recover any money as part of his conviction, either. His sentence included a mere $500 fine. The judge who presided over his trial denied prosecutors’ request for a forfeiture order, under which Collins’s assets could have been used to compensate victims of Refco’s fraud.


“[T]he judge in the criminal proceedings, Robert Patterson of New York, rejected prosecutors’ request for a forfeiture order after concluding that Collins received no personal benefit for his participation in the fraud.”

Nah, no “personal benefit” whatsoever:

“Mayer Brown billed Refco, Collins’s most lucrative client, more than $40 million in fees from 1997 through 2005, according to court records. Collins’s annual income usually topped $1 million during the same time span.”