Great news: Prominent Dem and Obama bundler probably won’t be prosecuted for $1B+ disappearance of customer funds

posted at 11:21 am on August 16, 2012 by Ed Morrissey

One of the relatively few criticisms of the Obama administration from the Left has been the curious lack of prosecutions over the 2008 financial collapse on Wall Street.  If, as Barack Obama maintains, the collapse came from the greed and unrestrained abuse of the system (rather than the government intervention in the lending markets that created a housing bubble and the government-endorsed mortgage-backed securities that poisoned the financial sector), why has the Department of Justice failed to hold anyone accountable?  The New York Times has a pretty good answer today, but probably not the one the Left wanted to hear:

A criminal investigation into the collapse of the brokerage firm MF Global and the disappearance of about $1 billion in customer money is now heading into its final stage without charges expected against any top executives.

After 10 months of stitching together evidence on the firm’s demise, criminal investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear, according to people involved in the case.

Ahem.  What kind of “porous risk controls” allowed MF Global to bet money that wasn’t theirs on Euro-zone debt?  That seems to have faded from view as the issue at MF Global.  It’s one thing for JP Morgan to bet the $6 billion farm on risky investments, but when a firm raids its customer accounts in an attempt to cover its own bad bets, that’s supposed to be a felony.

Here’s an even better look into the direction of investigators in the Obama-run Department of Justice.  Are they trying to get to the top?  No, they’re trying to get former Democratic governor and Senator — not to mention big-time Barack Obama bundler — Jon Corzine to rat out his underlings:

In the most telling indication yet that the MF Global investigation is winding down, federal authorities are seeking to interview the former chief of the firm, Jon S. Corzine, next month, according to the people involved in the case. Authorities hope that Mr. Corzine, who is expected to accept the invitation, will shed light on the actions of other employees at MF Global.

Those developments indicate that federal prosecutors do not expect to file criminal charges against the former New Jersey governor. Mr. Corzine has not yet received assurances that he is free from scrutiny, but two rounds of interviews with former employees and a review of thousands of documents have left prosecutors without a case against him, say the people involved in the investigation who spoke on the condition of anonymity.

It’s possible that Corzine had no idea that his own firm had started raiding customer accounts to cover Corzine’s own bad bets on EU debt … but it stretches the imagination to believe it.  And if that is the case, then why would prosecutor think that he could provide any good evidence of wrongdoing among his staff?  If he knew about it, he’s at least complicit, no?

Jeff Carter at Points and Figures smells a rat:

After speaking with CCC lawyer James Koutoulas, and other pro traders I have no doubt that money was stolen from customer segregated funds. There is just too much smoking gun evidence. Anyone with experience in the industry would be able to sift through the legal machinations and malarky to understand the deception involved. If this were adjudicated in an Arbitration or Probable Cause Committee at an exchange, I am relatively confident that Corzine would be found guilty based on the circumstantial facts that I know.

Jeff notes a passage in the Times’ article that paints Corzine as an “obsessive trader” who “frequently inhabited a desk on the trading floor.”  Jeff calls that a “tell” in that a man that connected to the market would know what losses were piling up — and how much of the firm’s money would be available to back his play.  The notion that an obsessive trader like Corzine, who micromanaged the firm’s trading on that level, was unaware of the origin of the money that did get used to attempt to recoup the losses is, well, very difficult to believe.

So who will take the fall?  Carter bets that it will be MF Treasurer Edith O’Brien, who might have had an interesting tale to tell had prosecutors offered her immunity.  Instead, the NYT suspects that federal prosecutors will end up cutting a deal with Corzine that allows him to shift the guilt to his staff.

All of which is, I’m sure, an amazing coincidence.  And ZeroHedge notices the best news of all from the Times article:

Mr. Corzine, in a bid to rebuild his image and engage his passion for trading, is weighing whether to start a hedge fund, according to people with knowledge of his plans. He is currently trading with his family’s wealth.

If he is successful as a hedge fund manager, it would be the latest career comeback for a man who was ousted from both the top seat at Goldman Sachs and the New Jersey governor’s mansion.

Who wants to put their money into Corzine’s hands again? Anyone?  Anyone?


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Is there any use hoping that Michelle and Barry had some of their personal money invested with Corzine????

Fleuries on August 16, 2012 at 1:14 PM

Who do you think got the money????

redguy on August 16, 2012 at 12:37 PM

The persons who took the other side of the trade.

bayview on August 16, 2012 at 1:14 PM

You really need to click the link to the Times’ piece and then read the comments — you’d think you stumbled onto some conservative news site as far as the anger towards both Corzine and the Obama Administration over the failure to prosecute in the MF Global case.

Of course, The New York Times being The New York Times and its readership being what it is, some of the anger on the comments page is coming from the left, simply damming Team Obama and the ex-Jersey governor as simply being tools of the evil Wall Street capitalist system (one commenter apparently was so caught up in the standard OWS boilerplate he forgot that Corzine’s not a Republican). Those types are still going to pull the lever come November for Barack Obama, but it’s amazing that virtually no one in the comments is even trying to defend Obama, Eric Holder or the New York Southern District Attorney’s office for their inaction on this case, and are even chiding the Times about it’s seeming unconcern about Corzine getting off on the criminal side scott free.

jon1979 on August 16, 2012 at 1:16 PM

Ed, you owe your readers a little more diligence when reporting on this important matter. You haven’t even properly explained why the felony charge is difficult if not impossible to make. Very poor.

lexhamfox on August 16, 2012 at 11:39 AM
Really? Because according to the NYT report, prosecutors seem pretty interested in making those charges against Corzine’s employees with Corzine’s help.

Ed Morrissey on August 16, 2012 at 11:42 AM

They had to have read the NY Times report you link, Ed, for them to know what’s in it…
Just sayin..

Tenwheeler on August 16, 2012 at 1:18 PM

Romney’s DOJ had damn well better prosecute and imprison this scumbag thief.

Rational Thought on August 16, 2012 at 11:30 AM

were there any funds recouped at all?? I mean I am thinking of the maddoff outrage back in the day (and rightly so), sure there were more money involved, but his victims got some of their money back, I know some 9 billions were recovered at some point (which I think is more than half of the total money lost by Maddoff)…

jimver on August 16, 2012 at 1:20 PM

Those types are still going to pull the lever come November for Barack Obama, but it’s amazing that virtually no one in the comments is even trying to defend Obama, Eric Holder or the New York Southern District Attorney’s office for their inaction on this case, and are even chiding the Times about it’s seeming unconcern about Corzine getting off on the criminal side scott free.

jon1979 on August 16, 2012 at 1:16 PM

typically dim sheepple mentality (could be the result of their massive cognitive dissonance, or some form of mental disconnect, or both), they see the wrongdoing, they acknowledge it, they get outraged by it, and they go for more of the same…voila, dim logic for ya…

jimver on August 16, 2012 at 1:24 PM

Is Jon Corzine black? Why didn’t someone tell me?

slickwillie2001 on August 16, 2012 at 1:28 PM

They had to have read the NY Times report you link, Ed, for them to know what’s in it…
Just sayin..

Tenwheeler on August 16, 2012 at 1:18 PM

Or have read Ed’s comments on it:

It’s possible that Corzine had no idea that his own firm had started raiding customer accounts to cover Corzine’s own bad bets on EU debt … but it stretches the imagination to believe it. And if that is the case, then why would prosecutor think that he could provide any good evidence of wrongdoing among his staff? If he knew about it, he’s at least complicit, no?

gwelf on August 16, 2012 at 1:47 PM

When State Justice fails vigilantes justice succeeds.

el Vaquero on August 16, 2012 at 1:50 PM

Who wants to put their money into Corzine’s hands again?

Sign me up.

Being in at the FRONT of a Ponzi/Pyramid scam still makes YOU a lot of money, if you get out before the whole thing crashes.

I wouldn’t care to be involved this time next year, but to take the massive profits he’ll be paying for a few months to “prove he’s still got it” and then bail before they find out I got someone else’s starting money.

That sounds like a good deal for me. As long as I can get out in time… and avoid prosecution for receiving stolen goods (or whatever they’d come after my profits for).

Yeah, that legal headache might outweigh the profits after all. Never mind.

gekkobear on August 16, 2012 at 1:56 PM

As I recall Corzine spent $400,000,000.00 in his final day in the Governors Mansion and Chris Christie was particularly pissed off.
With Christie as our next Attorney General, and make no mistake, that’s exactly what he will be, I look forward to renewed vigor at the DoJ in putting Mr. Corzine behind bars.

Afterseven on August 16, 2012 at 2:00 PM

Even if it’s proved Obama was not born in the US, then what? He’s not going to up and leave town voluntarily.

I’m counting on him to have plans to remain in the WH even if he loses in November.

He’s not leaving.

hawkeye54 on August 16, 2012 at 2:07 PM

Well, it’s not like he opened a lemonade stand or anything.

ronsfi on August 16, 2012 at 2:15 PM

this is economic justice right?

tom daschle concerned on August 16, 2012 at 2:20 PM

Lawless!

claudius on August 16, 2012 at 2:51 PM

Jon Corzine UNCHAINED and bundling for Obama…

The Ugly American on August 16, 2012 at 2:56 PM

This piece of hsit stole money from farmers, who were just trying to mitigate risk associated with being a farmer.

This piece of hsit stole money from farmers who are now suffering through a drought, and might not have the money to last the year.

This piece of hsit lost a company we do business with, who helps farmers hedge and market their grain, over $2 million.

Spit.

Some day you will get yours, Jon Corzine. And I fervently pray that you get all you deserve.

cptacek on August 16, 2012 at 2:57 PM

Martha Stewart erased an entry in her diary and fussed with her secretary and lied to the investigator about erasing it.

She wasn’t convicted of insider trading and went to jail anyway, Jon Corzine MUST be doing some financial favor for the Obama’s in the future when they are private citizens again. We know they accepted a piece of land next door to their house bought for them by Tony Rezko, they are not above quid pro quo.

Fleuries on August 16, 2012 at 3:04 PM

We can’t have the next Secretary of the Treasury, being a convicted felon, just like the unconvicted one who serves in the office now.

Concerned_American on August 16, 2012 at 3:10 PM

One more disgrace for the Obama administration.

VorDaj on August 16, 2012 at 3:17 PM

Thank you for that link. It’s very telling and helpful.

INC on August 16, 2012 at 3:29 PM

VorDaj on August 16, 2012 at 3:17 PM

Mitt and Paul should run with this.

Schadenfreude on August 16, 2012 at 3:57 PM

The big ugly lies and distortions of the democrat party tells to the dumbest, dumbed down people in the history of all civilizations is that wall street is ran by republicans….. the numbers and the criminal history of facts just plain do not match. Ponzi scheme galore…. buckets and buckets of shifted funds into multi-tiered “Management funds” Crooks and schemes slithering in and out of this white house revolving door. Corzine is a criminal and a thief and he IS the face of the democrat party.

OWS….. the biggest duped dopes held on earth by gravity… you want to know just WHO the 1%ers you loth and despise, you want to know who is keep you in abject poverty and real misery look no further than your local DNC contributor list. Just like the big bundler behind Solyndra that stole half a billion from our children… is completely free to continue free as a bird with his ill got gain at our expense with virtually zero penalty… and he is worth millions! No pay back to those he stole from and quite the democrat bundler is he too… no shame, no remorse no investigations just another bill presented to the taxpayer and investors to pay for…..all guaranteed by the Obama zombies.

Enron was bad, and was taken down….. Boy do we long for the days when crooks actually went to jail for their crimes and bank account and assets were frozen and dispersed to the rightful owners.

ActinUpinTexas on August 16, 2012 at 4:10 PM

Ed, you owe your readers a little more diligence when reporting on this important matter. You haven’t even properly explained why the felony charge is difficult if not impossible to make. Very poor.

lexhamfox on August 16, 2012 at 11:39 AM

Really? Because according to the NYT report, prosecutors seem pretty interested in making those charges against Corzine’s employees with Corzine’s help.

Ed Morrissey on August 16, 2012 at 11:42 AM

I think you need to provide a background to the problems with even bringing indictments against these kinds of crimes. In order for Corzine to face criminal charges they need to prove that he used client funds to take corporate positions and intended to break the law while doing this. The first part is difficult enough (MF used accounting loopholes for the transfers and calculating the regulatory requirements) but the second part is especially tricky in the US. Add to that the fact that the funds in question, the investigation, and recovery efforts, are across several jurisdictions and regulatory regimes and you can see why these investigations are difficult and time consuming.

With all this in mind it should surprise no one that Corzine is not going to be the subject of any criminal indictments.

This situation should infuriate everyone but if you want to see this kind of activity brought to an end you need to change laws for criminal fraud, liability, and accounting, rather than pushing for action from the DoJ. Based on the trustee reports, I can just about guarantee that any criminal case brought against MF Global’s principles are bound to fail with the exception of possible perjury charges. Civil actions are another matter entirely.

Sure.. it’s nice to see someone like Corzine go down in flames and this is good political sport, but the underlying problems aren’t going to be addressed by either party any time soon.

Bush – 1,300 convictions;

Clinton – 1,000 convictions;

Obama – Zero attempts.

VorDaj on August 16, 2012 at 3:17 PM

Pure BS. REFCO, Peregrine, Axius, and MEM insurance come to mind right away as far as CEOs being charged. The last of those indictments involved contributions to a Democrat.

lexhamfox on August 16, 2012 at 4:23 PM

Who lost more money? Ken Lay or Jon Corzine?

BigAlSouth on August 16, 2012 at 5:00 PM

Wow, I have to wonder WHAT is going through Scooter Libby’s mind right about now?

Missilengr on August 16, 2012 at 5:13 PM

Hey, this means there is no ‘rule of law’, and we can all do whatever the hell we want, right?

Midas on August 16, 2012 at 6:59 PM

Is there any proof that this money was not funnelled into the Obama Presidential Campaign?

Following the logic of Harry Reid, this is a question that must be proven false!

Freddy on August 16, 2012 at 8:03 PM

If Obama gets sent home to Chicago on January 20th Romney’s Attorney General can get right to work on justice for Corzine and his victims.

RJL on August 17, 2012 at 4:20 AM

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