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Jon Corzine Meet Dean Tofteland

Posted by Larry Doyle on March 8, 2012 6:27 AM |

“What they call ‘unlawful commingling’ on Wall Street is called ‘stealing’ back on Main Street.”

A week ago, I welcomed highlighting the plight of an elderly couple ensnared in the morass that is the MF Global debacle. Helen Metchikoff’s plea tugged at my heart as she wrote:

i am a 75 yr old grandmother my husband is 76 we take care of a brain injured 55 yr old son all of our investment money we saved in our lifetimes was invested in mf global for a monthly income to live out our lives now we are broke living on a pittance social security checks this is such a crime against all the people who lost through the greed of corzine and all the rest of his cronies isn’t there anything that can be done to help us we are suffering and i don’t think we deserve this they should all be punished severely for this just like madoff is…

There are clearly many, many more individuals and couples also suffering as a result of the “commingling” that transpired at MF Global. Yesterday, I read of just such another individual.

Jon Corzine meet Dean Tofteland. 

Thanks to Al Lewis of Dow Jones for highlighting this fascinating and very real story of The Farmer and The Financier:

America’s economy began with agriculture and evolved, over centuries, into high finance.

At one end of this historical spectrum is Dean Tofteland, 50, who has been raising corn, soybeans and pigs on 2,600 acres in southwestern Minnesota for the past quarter century.

On the other is Jon Corzine, who within the same quarter century served as chairman of Goldman Sachs, New Jersey’s governor, a Democratic U.S. Senator, and CEO of the $41 billion investment firm MF Global.

The main difference between the two is this: Tofteland must soil his hands to produce food while Corzine simply waves down the waiter.

The main thing they have in common is risk. Tofteland thought he was eliminating risk by hedging on the futures market in hopes of keeping his third-generation farm for his children. Corzine thought he was embracing risk to catapult himself into ever more glory and riches.

A second thing they have in common is an escrow account. To secure his hedges, Tofteland put up $253,000 in collateral at J.P. Morgan Chase. MF Global’s October bankruptcy filing unexpectedly froze that account.

A third thing they have in common is that they both testified before Congress in December.

Corzine: “I simply do not know where the money is.”

Tofteland: “What they call ‘unlawful comingling’ on Wall Street is called ‘stealing’ back on Main Street.”

Corzine has hired a criminal lawyer as a federal grand jury subpoenas documents and witnesses,but the sheer volume and complexity of MF Global’s transactions make a criminal prosecution unlikely, at least according to some recently published reports.

Tofteland hasn’t hired a lawyer to sue MF Global. He’s recouped most of his escrow money, but said he is still missing $80,000, not to mention trading opportunities he lost when his collateral was frozen.

Being on the more primitive end of America’s economic evolution, he doesn’t understand how MF Global could swiftly stick its hands in his escrow account as it spiraled into insolvency.

He didn’t invest in MF Global stock. He didn’t invest in the complicated European debt instruments that sent MF Global reeling. He wasn’t taking the kind of risks that sound kooky in Luverne, Minn. He was simply trying to lock in some prices for soybeans and corn.

Like thousands of other farmers in his position, Tofteland thought he was putting up collateral for his hedges so investors could be sure he’d deliver his bushels. He did not think of this money as an emergency loan to MF Global.

“I thought it’d be solved by now and we’d be going on with business,” Tofteland said in a telephone interview.

Funds do not go missing when businesses fail on the Main Street of Tofteland’s hometown. Yet on Wall Street, $1.6 billion disappeared with a wave of MF Global’s magic wand.

“These guys were professional money managers,” Tofteland said. “They were professional risk takers.

“I watched the Daytona 500. Those guys were professionals, too. If a guy nudges the car in front of him and that car crashes. Well, that guy knows what he did. He doesn’t come back to the pit and say, ‘I don’t know what happened.’ He knows what he did. He’s a professional driver.

“Besides, they can go back and watch the tape, and they’ll see what happened.

“Well, in this case there is a tape, too. There were wire transfers. There’s a debit and a credit everywhere they went. We have a record of where the money went. That’s not a mystery. … They got into a situation where they were going to lose the company, and they did everything possible to keep it going, including taking customer money.

“Jon Corzine and those guys, they were behind the wheel.”

Tofteland said he’s now reluctant to hedge and no longer deals with large banks. His small, local bank is carrying him through his current financial problems with loans.

“Small banks, they look at your situation. They say ‘Geez, it looks like you can make it. We trust you. We’re gonna stand behind you.’ They loan you money and they build you up.

“Big banks, they make a quick buck flipping you. And if the flip doesn’t work, they’ll destroy you. Then they’ll pick the pieces up through their vulture funds.”

And so goes our nation’s economic evolution, from farms to high finance. This is what we have called progress.

“There was fraud,” Tofteland said. “And nobody has been held accountable for it.”

Helen Metchikoff. Dean Tofteland.

How many thousands of others have also seen their lives and livelihoods impacted by the grotesque manner in which MF Global managed their business?

This is America?

Look for Al Lewis’ work often. He is a great read and clearly embodies a wealth of ‘sense on cents’.

Isn’t it time to  subscribe to all my work via e-mailRSS feed, on Twitteror 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.

Larry Doyle

  • Ross

    Thank you for not letting this rest.

    We are still out there, waiting for things to be made right.

  • phil

    You ask, “This is America?”

    Yep this is what it has evolved into. That’s why it’s called crony capitalism.

  • Jim

    Thank you for keeping the MF Global tragedy, in the open. I was a guaranteed broker under MF Global. I had gone through the bankruptcy of Refco so I thought it would be the same process of the futures division being sold and being able to continue business as usual. Well, innocence has been lost. The system failed us. It is easy to understand why as the regulators are the same bankers who stole the money in the first place.

    Friday, before Monday’s bankruptcy, I had attempted to send excess wires out for clients. Some requests ignored or was told it was too late. Other wire requests became checks that subsequently bounced.

    This was premeditated all the way.

  • Bill

    I’m sure Obama has Corzine’s back. The sad thing is the Washington mafia, for all their bloviating, could care less what happens to ordinary Americans.


    I have followed this tragedy closely and am absolutely stupefied, in this era of bailouts, at this time vis a vis the financial crisis “why were these accountholders not made whole?????” regulators?? CME?? Govt’t- what am I missing???
    The dollars are a pittance compared to the loss of investor confidence from this formerly SACRED bond between firm and client.

  • gch21

    Thanks for telling the nitty-gritty human side of this story. The more I read about this event, the more I want to understand the details. A good resource is Roger Kimble at PJ Media and his story wondering aloud why Corzine hasn’t been incarcerated. The story has links and the readers comments have them too (one of those reader links brought me here). Ann Barnhardt’s early call on this mess is also well worth reading.

    For myself, I think that when the rule of law is undermined or maybe grossly manupilated so that you don’t have confidence in it anymore, where does that leave you?

  • Mark P

    You can see kids getting carted off to jail every night on cops sometimes for long stretches for selling a couple of joints or pills and yet Corzine who has caused so much suffering for so many will go unpunished.This country believes that our justice system is a shining exmple for the world-what a joke.

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