On October 10, 2005, it was revealed that Bennett had hidden roughly $430 million of bad debt from the company's auditors and investors.
Confidence among the brokerage's customer base evaporated and Refco was bankrupt within seven days of the scandal breaking.
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, Inc (a company he controlled and owned).
Bennett, a former resident of Gladstone, New Jersey, was sentenced in 2008 to 16 years in jail for the financial fraud.
[2] Bennett was given early release on 26 May 2020 on compassionate grounds due to health concerns during the Covid crisis at the age of 71.