6. Financial Corp of America; $33.86 billion
Not enough material is available about the reasons that led to its collapse. It filed for bankruptcy on September 9, 1988.
7. Refco Inc; $33.33 billion; Oct. 17, 2005,
Founded in 1969 as Ray E Friedman and Co, Refco was a New York-based financial services company, primarily known as a broker of commodities and futures contracts.
Prior to its collapse, the firm had over $4 billion in approximately 200,000 customer accounts, and it was the largest broker on the Chicago Mercantile Exchange.
The firm's balance sheet at the time of the collapse showed about $75 billion in assets and a roughly equal amount in liabilities. Refco entered crisis on October 10, 2005 when it announced that its chief executive officer and chairman, Phillip R Bennett had hidden $430 million in bad debts from the company's auditors and investors, and had agreed to take a leave of absence.
Apparently, Bennett had been buying bad debts from Refco in order to prevent the company from needing to write them off, and was paying for the bad loans with money borrowed by Refco itself. Between 2002 and 2005, he arranged at the end of every quarter for a Refco subsidiary to lend money to a hedge fund called Liberty Corner Capital Strategy, which then lent the money to Refco Group Holdings.
Bennett's company then paid the money back to Refco, leaving Liberty as the apparent borrower when financial statements were prepared. On October 20, Liberty announced plans to sue Refco.
on October 12 Bennett was arrested and charged with one count of securities fraud for using US mail, interstate commerce, and securities exchanges to lie to investors.
Refco filed for Chapter 11 bankruptcy on October 17, 2005.
On July 3, 2008,Bennett was sentenced to 16 years in Federal prison.
Image: Refco CEO and Chairman, Phillip R Bennett
Also read: Billionaire college dropouts!
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