9 convicted in Austrian bank fraud

VIENNA, Austria — Nine people, including a prominent executive who fled to France in an attempt to elude justice, were convicted Friday of criminal charges in a major Austrian bank-fraud case linked to the 2005 collapse of New York-based commodities brokerage Refco.

Vienna federal court Judge Claudia Bandion-Ortner found the defendants responsible for $1.9 billion in losses at BAWAG, Austria's No. 4 bank.

The defendants include two former BAWAG executives, Helmut Elsner and Johann Zwettler, and U.S.-based investment banker Wolfgang Floettl.

All nine had proclaimed their innocence on charges of breach of trust, aiding breach of trust, false accounting and fraud.

Bandion-Ortner denounced Elsner's actions as "aggressive and recklessly risky" and said he gambled with depositors' assets as though he were "in a casino."

"Elsner was clearly the initiator — the driving force," the judge said.

She sentenced him to 9 ½ years in prison and ordered him to repay BAWAG $10.76 million in pension benefits. Zwettler was ordered to serve five years.

Floettl received a 2 ½-year sentence, but most of that time was suspended and he will serve only 10 months behind bars, Bandion-Ortner said.

The nine had faced up to 10 years in prison. All but Floettl immediately filed appeals; Floettl's lawyer said he would take a few days to decide whether to challenge his conviction.

BAWAG loaned former Refco CEO Phillip Bennett several hundred million dollars just before the brokerage filed for bankruptcy protection in October 2005.

Bennett was sentenced to 16 years in prison Thursday in the U.S. by a judge who denounced what he called the "staggeringly arrogant" greed of the white-collar criminals implicated in the case.

Refco was one of the world's largest commodities brokerages, and prosecutors said BAWAG played a pivotal role in its collapse.