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Jon Corzine’s Perjury Problem

Former Democrat governor of New Jersey, Democrat senator, top Obama campaign donation “bundler,” and Obama Administration economic guru Jon Corzine really knocked ‘em dead in the House of Representatives with his astounding ability to know absolutely nothing about the workings of the huge investment company he ran into the dirt, or the whereabouts of $1.2 billion in investor funds. 

He turned up in the Senate last week to repeat this performance, saying nothing of much interest… until he was confronted with certain other testimony.  As related by the Washington Post:

The head of the private exchange tasked with overseeing MF Global said Tuesday that Jon Corzine may have been aware of a transfer of client funds from the firm he formerly led, possibly contradicting the former governor and senator’s statements under oath that he had no knowledge of the events that resulted in the disappearance of $1.2 billion in customer funds.

In a hearing before the Senate Committee on Agriculture, Nutrition and Forestry, Terrence A. Duffy, the chief executive of CME Group, said a senior female executive of MF Global told a CME auditor that Corzine — the former chief executive officer and chairman of the firm — was aware of a $175 million loan of customer money to a European affiliate of the now-bankrupt commodities brokerage.

“Mr. Corzine was aware because our employee had heard this, on the phone—‘Send back 175’ — and said he was aware of this loan,” Duffy told the Senate committee.

This led Senator Pat Roberts (R-KS) to remark, “You sort of tossed a bomb here.” 

There are also some sticky timing issues involved for Corzine, as CNN Money notes that he claimed no awareness of any customer funds being abused until October 30, the day before MF Global went bankrupt, but Duffy said that “MF Global had unlawfully transferred money out of customer accounts on Thursday, Oct. 27, and Friday, Oct. 28.”

By Thursday, Corzine had changed his story considerably.  From the Wall Street Journal:

Former MF Global Holdings Ltd. Chief Executive Jon S. Corzine testified Thursday that he knew about an overseas transfer of funds that has come into focus in recent days as regulators and Congress seek to find out what became of an estimated $1.2 billion in missing customer cash.

Mr. Corzine testified, however, that he received assurances that the transfer of millions of dollars to a J.P. Morgan Chase & Co. account in London on Oct. 28, the last business day before MF Global filed for bankruptcy, was approved by at least one official in MF’s back office.

“The back office in Chicago explicitly confirmed to me that the funds were properly transferred, and I understood that J.P. Morgan Chase was satisfied,” Mr. Corzine said, adding that he believed some of the confirmations were in writing.

Corzine continues to insist that he “never directed anyone at MF Global to misuse customer funds,” which is very different from claiming he was entirely ignorant that those funds had been misused.

The Journal’s account of the Senate hearings on MF Global paint a remarkable portrait of a company spinning madly out of control, with danger signals ignored and rosy scenarios trotted out to keep investors from panicking.  Hundreds of millions of dollars magically appeared and disappeared from accounts during the final days. 

None of this reflects very well on the CEO who was so confident he would become the next Treasury Secretary that he offered to pay MF Global bondholders extra interest after he left to join the second Obama Administration.  This was supposed to compensate them for the nerve-wracking possibility that MF Global would be deprived of Corzine’s investment genius after President Downgrade scooped him up.

Also, if class-warfare Democrats have been paying attention to the Senate hearings, they will have learned that the man who killed MF Global and somehow lost $1.2 billion of client money has been staying at the Ritz-Carlton while in Washington, and has not bothered to contact one single unhappy customer of MF Global.

Well, who cares if a bunch of millionaire and billionaire fatcat investors are unhappy, right, class warriors?  Except that’s not who’s getting screwed by the MF Global collapse.  A lot of farmers and ranchers saw their money disappear after Jon Corzine’s big gamble on European bonds, as the Christian Science Monitor explains:

The shock waves from the collapse of commodities trading firm MF Global Inc. are hitting hard across rural America, where farmers, ranchers and agricultural business owners are nervously waiting to learn how much money they’ve lost.

Many of the farmers who traded with MF Global, which is being investigated over what federal regulators say is an estimated $1.2 billion that may be missing from customer accounts, used the futures markets to reduce the risks of volatile prices. Locking in prices through the futures market — something farmers have been doing for a century — allows them to plan ahead while knowing what their costs will be.

Mike Mouw, co-owner of Mouw’s Feed and Grain Inc. in the southwestern Minnesota town of Leota, said his business relies on the futures markets both when it buys grain from farmers and when it sells feed to hog producers. That makes it possible for the company to plan two or three years ahead. Now, though, Mouw estimates he’s out about $250,000.

“I’m praying that I get it back,” he said.

Also praying is Minnesota farmer Dean Tofteland, whose story is told by the Minneapolis Star-Tribune:

Among those who are missing money is Minnesota farmer Dean Tofteland. He didn’t mince words about what he thinks happened to $253,000 he had deposited in his futures and options account at the bankrupt brokerage.

“Commingling money is stealing money,” Tofteland told members of the Agriculture Committee earlier in the day.

Tofteland, who raises wheat, corn and pigs in Luverne, stressed his sense of betrayal as he waits to see if he will recover the $253,000, plus another $100,000 he lost when he was forced to liquidate hedges held at MF Global.

“These funds were not an investment in MF Global,” Tofteland told committee members, including Sen. Amy Klobuchar, the Minnesota Democrat who invited him to testify. “These funds were not a loan to MF Global. These funds were simply collateral required by the exchange as a guarantee for my promise to deliver the bushels that I priced.”

What makes all this especially bizarre is the sheer scale of the money involved.  We’re not talking about a couple of bucks missing from the petty cash fund.  Even if Corzine escapes perjury charges, how can “I don’t know what happened” possibly be an acceptable excuse for such a catastrophe?  If he skates out of legal jeopardy, the confidence of an already skittish financial marketplace is sure to take another hit.

Written By

John Hayward began his blogging career as a guest writer at Hot Air under the pen name "Doctor Zero," producing a collection of essays entitled Doctor Zero: Year One. He is a great admirer of free-market thinkers such as Arthur Laffer, Milton Friedman, and Thomas Sowell. He writes both political and cultural commentary, including book and movie reviews. An avid fan of horror and fantasy fiction, he has produced an e-book collection of short horror stories entitled Persistent Dread. John is a former staff writer for Human Events. He is a regular guest on the Rusty Humphries radio show, and has appeared on numerous other local and national radio programs, including G. Gordon Liddy, BattleLine, and Dennis Miller.

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