Former New Jersey governor Jon Corzine resigned as CEO of MF Global after the company collapsed this week, with hundreds of millions of investor dollars still missing:

Former New Jersey Governor Jon Corzine resigned as CEO from now-bankrupt futures brokerage MF Global on Friday under a cloud of legal uncertainty that has prompted him to hire a prominent white-collar attorney.

Corzine’s exit comes just four days after New York-based MF Global collapsed under pressure from over $6 billion in risky bets on European sovereign debt directed by the former Goldman Sachs (GS: 105.15, -2.53, -2.35%) chief. Its Chapter 11 filing marked the eighth-largest bankruptcy in U.S. history.

Since its implosion, a string of negative headlines have emerged, including more than $600 million in missing client funds and questions about whether MF Global management may have misled investors about the company’s health.

MF Global did more than mislead investors.  The company admitted that it diverted funds from “segregated” customer accounts, which has now drawn the interest of the FBI:

The fallout from MF Global Holdings Ltd.’s collapse intensified as the Commodity Futures Trading Commission voted to issue subpoenas to the securities firm and the Federal Bureau of Investigation planned to examine whether client funds are missing, according to people familiar with the situation. …

It isn’t clear if the discrepancy, about $900 million as MF Global raced to sell itself over the weekend, was caused by money being diverted by company officials desperate to meet margin requirements or collateral calls as the financial situation became dire, these people said. Another possibility is that the gap reflects bookkeeping or accounting errors, as well as a delay in recording transactions in MF Global’s books given the securities firm’s far-flung trading and clearing operations. …

According to a U.S. official, MF Global admitted to federal regulators early Monday that money was missing from customer accounts. MF Global acknowledged a shortfall in a phone call amid mounting questions from regulators as they went through the firm’s books.

In other words, Corzine looks an awful lot like the so-called 1% that the Occupy Movement despises.  Democrats, especially Barack Obama, had hoped to ride that class-warfare populism to electoral victory in 2012, or at least ride it long enough to avoid electoral disaster.  However, as the Washington Post reported earlier this week, they’re going to have to ride a very long way to distance themselves from MF Global, and especially Jon Corzine himself (via Newsalert):

The bankrupt financial company MF Global, now under federal investigation for possibly misusing clients’ money, is one of the top sources of contributions for President Obama’s reelection, complicating the campaign’s effort to turn public anger at Wall Street into a political advantage.

Employees of the company have given $108,650 to Obama’s campaign and the Democratic National Committee, according to federal records. MF Global’s chairman and chief executive, former New Jersey governor Jon Corzine, has raised at least $500,000 for the campaign and the DNC as a “bundler,” or volunteer fundraiser.

Rumors at one point had Corzine under consideration as a potential member of Obama’s administration, especially after the midterm debacle:

MF Global recently made a bond sale with an unusual clause, saying the interest rate on the bonds would rise 1 percent if Corzine ended up being appointed to a post in the Obama administration. There has been speculation that he could be in line for Treasury secretary if the president is reelected.

If MF Global raided customer accounts to float its own trades, that will likely result in a very public, and very messy, fraud trial for company executives — including Corzine.  That will prove very, very embarrassing for Obama himself, who personally campaigned on Corzine’s behalf in 2009 when the then-governor tried fending off a challenge from Chris Christie.  Seth Mandel reminds us at Commentary how much Obama personally vouched for Corzine’s integrity:

Like many of us in public life today, Jon is a leader who’s been called to govern in some extraordinary times. He’s been tested by the worst recession in half a century — a recession that was caused by years of recklessness and irresponsibility and a do-nothing attitude. It was caused by the same small thinking that has plagued our politics for decades — the kind of thinking that says we can afford to just tinker around with our problems, we can put off the tough decisions, defer the big challenges. We can just tell people what they want to hear instead of what they need to hear.

Well that’s not the kind of leader that Jon Corzine is.

Recklessness?  Irresponsibility?  Gee, that sounds like the best-possible case for MF Global.

And let’s not forget that Obama recruited Corzine as his unofficial liaison to Wall Street donors:

President Obama is desperately putting his Wall Street stock in an unlikely old buddy.

The beleaguered president has recruited former Goldman Sachs head honcho Jon Corzine to shore up re-election funds from the banking industry, which is furious over Obama’s financial regulations.

Corzine, the former governor of New Jersey who was blasted out of office by Republican Chris Christie in 2009, has attended secret meetings with the president and has been working on Obama’s 2012 campaign for months, The Post has learned.

The Democrat, who now leads Manhattan-based brokerage MF Global, has been tasked with scraping up the very little banking-industry support Obama can still get.

If the money doesn’t turn up, Corzine could sink Obama’s entire class-warfare strategy.  He’s going to have to explain how he endorsed someone who could become nearly as toxic as Charles Keating or even Bernie Madoff, and most of that explaining will have to go to the very Occupiers he has encouraged for most of the last few weeks.  After all, this is exactly the kind of chicanery that sets them off.  A Corzine trial will have the former prominent Democratic politician in the headlines for weeks, perhaps months — and that will start not with the trial but with an indictment, if one gets produced.

Every Republican will tie Corzine to every Democrat and the DNC in 2012, and in the political environment that Obama himself created and stoked, it will stick to them like hot grease on skin.  The Occupy strategy will go bust as a result.