Submitted by Go2ManagedFutures.com
Attempts are being made to sweep MF Global under the media rug in hopes that investors simply forget the eighth largest bankruptcy in US history despite clear allegations of documented fraud surrounding the firm and its politically connected former president, Jon Corzine. The problem is, astute financial observers are aware of the corruptive behavior of Mr. Corzine, certain regulators and the US justice system. Some are calling into question the security of the entire US financial system, not just the commodity industry.
At the center of questionable activities is the bankruptcy process itself, loaded with recognizable personalities. Among them, Louis Freeh, the former director of the Federal Bureau of Investigation (FBI), who has been accused of dragging his feet on a fraud investigation of top MF Global executives [update: and is under investigation by the Treasury Department for allegedly taking money from a designated Iranian terrorist group]. A trustee for the creditors in the Chapter 11 bankruptcy case, JP Morgan Chase, MF Global’s largest creditor, was said to have actively recruited Mr. Freeh for the trustee position, despite his law firm having but a handful of lawyers and no commodity industry or bankruptcy experience. However, because this is a Chapter 11 bankruptcy, the process can drag out and Mr. Freeh and his related business endeavors could stand to pull in over $100 million in fees on the “plum case.”
Some say Mr. Freeh is rewarding JP Morgan by soft-peddling a fraud investigation despite his role as a federally appointed trustee and the apparent nod by the Department of Justice (DOJ) that anointed Mr. Freeh status as the DOJ’s eyes and ears on the case. Falsification of documents given by MF Global to regulators in the final days of the firm’s survival was alleged in Congressional Testimony by CMEGroup Chairman Terry Duffy, and knowledgeable industry sources speculate a web of fraudulent activity lies underneath the surface. The key to uncovering this evidence could be the MF Global back office, members of which are currently requesting immunity from prosecution in exchange for their testimony.
Strategically leaked press reports have cited investigators as saying the “case has gone cold,” and speculation widely exists that Mr. Corzine will not be convicted. These “cold case” claims are being made despite the fact that press reports claim the MF Global back office has not been interviewed and neither have top MF Global executives, who are still working for the firm (and apparently set to collect bonuses).
This is the case that is currently threatening the stability of the entire US financial system, establishing the template for future potential looting by the TBTF banks with the help of complicit and captured revolving door regulators and ex-government officials. It is the case that many speculate is being swept under the rug of media attention.
To see a recent media interview on Capital Account, where Mr. Freeh’s role is examined along with other significant questions, click here, or view the embedded video below.