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Is Jon Corzine “Too Big to Be Indicted?” Part IV

Posted by Larry Doyle on December 8, 2011 8:58 AM |

With most eyes and ears today fixated upon Brussels to see what version of “charades” will next be played by the European heads of state in an attempt to save their union and their euro, there should actually be a slightly more entertaining ‘show’ on Capitol Hill today.

What ‘show’ might this be?

The testimony provided by the recently humbled and one-time Wall Street titan and Democratic political bigwig Jon Corzine in the ongoing saga of MF Global.

What really happened at MF Global? Who knew what and did what? 

When did they know it and when did they do it?

Will MF Global’s CEO Jon Corzine embrace our highly prized Sense on Cents virtues of truth, transparency, and integrity? Will he invoke his right against self-incrimination by taking the 5th? Will he try to thread a needle and appear apologetic while truly yielding little of substance in his testimony?

Will any member of the House Agricultural Committee, which is holding this hearing to address the demise and bankruptcy of MF Global — and find out where a mere billion dollars of customer funds went — have the balls to truly press Corzine and demand answers?

I repeat my question highlighted in three previous commentaries, “Is Jon Corzine too big to be indicted?” (I, II, III).

Well, if the story that was released just prior to 7am this morning is any indication, I recommend you grab a large popcorn and a barf bag if you plan to watch this show because as The Washington Post highlights, Jon Corzine to Tell House Panel He Doesn’t Know Where Customers’ Money Went:

Jon S. Corzine, the former U.S. senator and New Jersey governor who presided over the collapse of the commodities brokerage MF Global, says he cannot explain what happened to “many hundreds of millions of dollars” that the firm was holding for customers.

In testimony prepared for delivery to Congress Thursday, Corzine says he was “stunned” to learn shortly before the firm sought bankruptcy protection at the end of October that MF Global could not account for the money.

I simply do not know where the money is, or why the accounts have not been reconciled to date,” the former MF Global chief executive says, according to the testimony.

After having read this story this morning, I thought I could hear off in the distance an echoing of people saying, “You have got to be f*&#!n kiddin’ me,” while others appeared to be clearing their throats in a muffling sound eerily similar to a call of “Blowjob”!!

If this MF Global situation were not so dire and serious, this leak of Corzine’s expected testimony may actually be fairly comical.

Is Jon Corzine a dunce? Are the members of the Committee? The media in our nation who do not fully pursue these bankruptcies? Or, are we, the American public, who allow ourselves to be fooled and compromised by those on Wall Street and in Washington who continue to engage in their incestuous relationships at the expense of our nation as a whole?

You cannot make this stuff up.

Do you think we might need an independent investigation led by somebody with unquestioned integrity? You think?

Does anybody think Harry Markopolos might be able to figure out where these customer funds went?

Questions, comments, constructive criticisms encouraged and appreciated.

Larry Doyle

Isn’t it time to  subscribe to all my work via e-mailRSS feed, on Twitter or Facebook? Do your friends, family, and colleagues a favor and get them to do the same. Thanks!

I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets, our economy, and our political realm so that meaningful investor confidence and investor protection can be achieved.

  • Rob Phillips

    Let’s send Richard Cordray in there to run the hearing.

  • lizzy

    Your coverage of Corzine has been great. Keep after the story; maybe it will get the attention it deserves. We are surrounded by such grotesque corruptions now. Our officials need to act on our behalf.

  • Always Learning

    Simultaneously today we have: (1) Attorney General Eric Holder in a Congressional Hearing being less than truthful about his knowledge of Fast & Furious; and (2) Jon Corzine in another Congessional Hearing being less than truthful about the goings on at MF Global. Even more insulting, the place card in front of Corzine reads, “The Honorable Jon S. Corzine.” What a world.

  • Bill

    I imagine those Congressmen knew less after listening to Corzine’s “testimony” than they did before.

  • Ben

    My father forwarded this article to me today. Seems quite clear what happended and where the money went. It’s a pretty scary financial world out there.
    http://newsandinsight.thomsonreuters.com/Securities/Insight/2011/12_-_December/MF_Global_and_the_great_Wall_St_re-hypothecation_scandal/

  • Chris

    No worries I hear that Mary Shapiro is leaving the SEC and run the investigation over at MF Global. Finally transparency.

  • Ed

    If Jon Corzine lost over a billion dollars while at MF Global, we should make him head of both the Treasury and the Federal Reserve system. He could lose all the records of bonds that were issued and are redeemable, and he could lose records of all the old dollars, and just issue lots more, and claim there is no increase in dollars, since all the old ones are misplaced now. Imagine, he lost over a billion dollars in just 12 months. Is that a record?

    Maybe we can have a new word for chief executives who lose other people’s money. The executives are Corziners. Those losing money are the innocent victims of a Corzine Scheme. And someday his good friend Barrack Obama could say when the federal till is dry, “We’ve been Corzined!”

    Why not make him in charge of Federal Payroll and he can easily lose all the paychecks headed to President Obama’s Czars, and maybe if he started losing the congressional paychecks the members of Congress would be getting paid what they are worth.

    This man has great talent. But what does this say – he is an alumni of Goldman Sachs and they have lost sight of all integrity and propriety.

    With such magical skills, could he lose George Soros? Now that would qualify him for a really big bonus!

    My prediction, unlike Bernie Madoff, Jon Corzine will never be indicted, never spend a day behind bars….

  • LD

    Bloomberg review, Corzine’s Intent at Hearing Was to Head Off Possible Claims,

    Throughout more than two hours of congressional testimony, Jon S. Corzine was careful to invoke the idea of intent when asked how his failed brokerage, MF Global Holdings Ltd., came to lose track of as much as $1.2 billion in its clients’ money.

    “I certainly would never intend to direct or have segregated funds moved,” Corzine said yesterday during his appearance before the House Agriculture Committee, testifying he didn’t know what happened to the missing money. “I am comfortable that certainly on my part there was no intention to violate segregation rules,” he told lawmakers at another point.
    Corzine, responding to the first of three subpoenas from congressional committees investigating the collapse of his firm and the missing funds, defied the expectations of some analysts when he decided to answer questions and not resort to his right against self-incrimination. Lawyers said it was no surprise that he repeatedly focused on intent in his testimony.

    The language Corzine used “is certainly an attempt to defuse any criminal responsibility,” said Stephen Braga, an attorney with Ropes & Gray LLP in Washington.

    “Most crimes require a wrongful intent, and accordingly mistake is a defense to most crimes,” Braga said. “This testimony suggests an unintentional, mistaken occurrence, which would not be criminal. Whether that suggestion fits the facts or not remains to be seen.”

    The 64-year-old former New Jersey governor and U.S senator, who hasn’t been accused of wrongdoing, spoke publicly for the first time since he resigned as chairman and chief executive officer of MF Global, which filed the eighth-largest U.S. bankruptcy Oct. 31.

    Funds Probed
    With the Commodity Futures Trading Commission, Securities and Exchange Commission and Justice Department probing the missing funds, Corzine faced the dilemma of how to present his version of events without opening himself to potential charges or further litigation. Several lawsuits have been filed by customers and former employees since the Oct. 31 bankruptcy, including one yesterday against Corzine and four other former MF Global executives in federal court in Chicago by a group of commodity traders whose accounts were frozen.

    Testifying under oath, Corzine said he didn’t knowingly authorize any movement of funds out of client accounts, and that any transfers of money could have been a misunderstanding or misinterpretation of his intent.
    “I’m not in a position, given the number of transactions, to know anything specifically about the movement of any specific funds,” Corzine said.

    ‘Pin You Down’
    After one exchange, Representative K. Michael Conaway, a Texas Republican, said: “I understand why you keep using ‘intent.’ I’m not trying to pin you down, we’re not the prosecution.”

    Corzine also repeatedly said that he didn’t “direct” anyone to move funds. That was also a careful choice of words, according to Seth Taube, head of the trial section in the New York office of law firm Baker Botts LLP.
    “The issue is what safeguards were in place with respect to segregated funds,” Taube said, noting that the responsibility of top executives is to put systems in place to prevent mistakes. “So in a sense Governor Corzine’s answer misses the point. It’s not about directing someone to take the funds, it’s about locking the door so no one else can open it and help themselves.”

    Corzine said he wasn’t an expert in payment, clearing and settlement systems and didn’t view reports daily on the segregation of client funds. Instead, he said he was “stunned” to learn of the shortfall and repeatedly described a state of “chaos” at the firm in the last days before its bankruptcy.

    Sarbanes-Oxley
    James W. Giddens, the trustee overseeing the liquidation of MF Global, has estimated that $1.2 billion is missing. If that’s because of internal errors at MF Global, Corzine may have breached responsibilities under Sarbanes-Oxley rules, according to Daniel Collins, a professor of accounting at the University of Iowa’s Tippie College of Business.
    Under the 2002 law — for which Corzine voted as senator — top executives must certify the accuracy of financial statements and assess whether they have sufficient safeguards to catch fraud and bookkeeping errors. Corzine signed off on MF Global’s quarterly reports prior to the bankruptcy.

    “Whether these are operational errors or not is a serious matter,” Collins said in a phone interview. “If effective controls for monitoring the flow of the funds from the clients through the different investments are not in place, then that would be a breach of the Sarbanes-Oxley responsibilities of top management.”

    Two More Subpoenas
    President George W. Bush signed Sarbanes-Oxley into law after accounting scandals at Enron Corp. and WorldCom Inc. eroded investor confidence. Executives must also have internal controls certified by an outside auditor under the law.

    Yesterday’s testimony came before a committee of 46 lawmakers with oversight of the CFTC. Corzine is scheduled to face two more congressional panels — the Senate Agriculture Committee and House Financial Services oversight and investigations subcommittee — that voted to subpoena his testimony for hearings next week.
    Corzine had requested to appear in January so he could gain access to his e-mails, notes and other documents at the firm.

    Corzine said that on the evening of Oct. 30, the night before MF Global filed for bankruptcy, he was informed of the shortfall in client accounts and told employees, “We’ve got to fix this,” and “We’ve got to find the money.” He speculated that someone “could misinterpret” such remarks.

    ‘Decisive Figure’
    “In every witness’s day in the congressional dock, there are probably phrases he wished he hadn’t uttered,” Stephen Ryan, head of the government strategies practice at McDermott Will & Emery LLP in Washington. “A decisive figure like a former senator and governor and senior Goldman Sachs official says things clearly, precisely and is not subject to misinterpretation.”

    At the hearing, lawmakers began probing who at MF Global, if not Corzine, was responsible for the daily accounts. They’ve already pledged to hold additional hearings to investigate the company.

    “He was responsible for the people and systems he put in place,” Representative Frank D. Lucas, chairman of the House Agriculture panel, said in an interview after the hearing. “This is far from over.”

  • Peter S.

    The “Honorable” Jon Corzine must have reviewed Roger Clemens’ testimony for “what not to do” when testifying before Congress. It was just another circus side show for the nation. Corizone denied that his investment strategy was based on the “they will get bailed-out” strategy that worked so well for many investment banks betting in the U.S. That should ultimately lead to negligence charges and a billion dollar plus settlement without admitting or denying.

  • Huckleberry

    What is the link between MF and the Eurozone?

    It sounds to me like these guys blew client money trying to cover margin calls resulting from bets on Euro debt.

    I doubt any attempt will be made to go after Corzine. Some Republicans will use this for partisan advantage in their electioneering, but they will never go after him. He is too connected to their own financial masters to become another Bernie Madoff. And what was Madoff, really, but a long-con artist who stole from other rich people? Yet the corporate media tried their best to turn him into the “Immanuel Goldstein” of the Great Fraud.

    The larger question, in my mind, is this: What if MF is just one of many firms who have done the same thing? By that I do not mean ‘merely’ using client money to cover gambling losses. What if MF is just one of many (and a small fry, at that) who are facing ruin because they bet on Euro debt?

    I don’t think MF is an isolated incident. I don’t think there are such things as isolated incidents any more.

    So who will be next? And when is Geithner going to be asking for more money to bail out the vampires at the top of US finance capital?






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