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On Corzine - MFG in the fog of war
I watched Jon boy. I didn’t hear any smoking guns. That doesn’t mean there weren't any. Keep in mind that Corzine has the best lawyer (for this) that money can buy. Andrew Levander has been advising the former CEO of MFG on every word he says.
I was surprised that there was no 5th Amendment stuff. I’m sure that Levander was pushing for that. But Corzine really didn't have much of an option. If the former Senator/ Governor pled the fifth he would have been convicted in the public’s eye.
So Jon talked, but he said nothing. You can be absolutely certain that Corzine spent many hours with his lawyers fielding question that might have been asked by the congressional committee. When Corzine seemed to stutter, pause, look up at the ceiling groping for the right words to use, it was just a very well orchestrated and practiced acting job.
Jon made one response that I thought was significant. He said several times:
"I never intended to break any rules.”
This could mean anything, but consider that this canned response was formulated word for word by Levander. I think what Corzine was saying was that he may have authorized some actions in the later stages of MFG’s existence that ultimately led to the expropriation and loss of customer funds. He is trying to establish that whatever he may have said (or signed), he did not understand the consequences. Whether this is true or not, I don't know.
We might find out at some point that some clown in the treasury department at MFG asked JC a question in the middle of the panic:
“We could re-hypothecate the seg accounts and plug the gap tonight! Should we do that?”
And Jon could have looked up and said:
“Do what you can!”
The problem with the “I never intended” defense is that it doesn’t work for a CEO who should have know better.
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I recently had a conversation with an individual (we'll call him Bob) who had three MFG accounts. He, like many other customers, smelled a rat with MFG as the stock price plunged and the FINRA issues with the Euro bond positions became known.
Bob voted with his feet. He closed off all open positions. He got back to cash. Then he requested a wire transfer for the balance(s). He left a small operating balance in the accounts in order to keep them open. This fellow was small potatoes. Two of the accounts were under $20k. The other was $215k.
Wire transfers to a bank were requested.
According to Bob, the wires went out on Wednesday, October 26 (four days before BK). All three wire transfers were received on Thursday October 27.
But on Friday, October 28, the bank that had received the funds reversed the wire transfer for the larger amount. The transfers for the two smaller amounts were not reversed.
This is highly unusual. It is extremely difficult to reverse a wire transfer. Wire transfers are considered to be Immediately Available Funds or “Good Funds”. Absent a court order, the only way to reverse a wire transfer is when the remitting bank provides a letter of indemnity ("LOI") to the receiving bank. I’ve written these letters. They would look something like this:
To: ABC Bank
From: XYZ Bank
Reference:Wire Transfer #123456 date 10/26/2011 for $215,000 for further credit to "Bob", Account #AB3355
We hereby request that you immediately debt the account of (Bob) for the full amount of the transfer and return the funds to us.
If you comply with this request we hereby agree to hold you free and harmless of any consequences that may arise as a result of this request.
XYZ Bank
Basically XYZ has to give ABC a blanket guarantee that they will not get hurt by the request.
Here’s the rub. I’m told that in the matter at hand, the "XYZ" bank operating on behalf of MFG was JPM.
If I’m right that a LOI was required to claw back a wire transfer, then - assuming my information is correct, and I think it is - it had to have been JPM that wrote the indemnity letter. (No one would have acted on a LOI from MFG on 10/28).
I'm speculating quite a bit. But it’s still worth considering. At this point, anything is worth considering. We are six weeks past the BK. As Corzine and all the others said today, they have no clue where the missing money is. There has been any army of forensic accountants (FBI & KPMG) toiling night and day. No one has found the money. That's crazy to me.
A possible daisy chain:
(1) MFG orders XYZ Bank to make a money transfer.
(2) XYZ makes the transfer.
(3) After the transfer has been made (or during the same day) XYZ issues a letter of indemnity (“LOI”) and obtains a refund of the transfer.
(4) The initial wire transfer is accounted for (correctly) at MFG as a reduction of the customer account liabilities (Segregated account).
(5) When the money comes back into XYZ (pursuant to the LOI) it is not credited back to the Seg./customer account. (The fog of war factor? Deliberate?)
(6) After the money has been returned to XYZ bank, it appears to be "unrestricted funds" of MFG. It gets commingled. Someone grabs the money to offset a claim. The Chinese Wall between the Seg. account and MFG corporate account has been broached. Once the money is commingled, it is impossible to figure out who owes what to whom.
A question for any of those many MFG account holders: Did any of you have a similar experience with wire transfers? If so, could you let me know? I’d love to get to the bottom of this mystery.
Bkrasting@gmail.com
Note: I'm aware that in the final days, MFG issued checks to customers that bounced. This is similar to the wire transfer issue I describe. But it is also a different kettle of legal fish. There are many reasons for a check to bounce. Checks, unlike wire transfers are not "good funds". To claw-back a wire transfer requires significant human intervention. Banks do not write LOIs without carefully considering the consequences. There's always a signature on an LOI......
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"I misinterpreted the rules."
http://www.southparkstudios.com/clips/165716/i-misinterpreted-the-rules
Excellent article. We need more of these legal/financial analysis's. I thought it telling when Corzine was asked if he would suffer personally for his mistakes at MFG. If he had been honest he would have said "I am doing everything in my power to protect my tens of millions (hundreds?) in assets, even if it means I go through a living hell for a few months".
Corzine is not particularly smart IMO. He's a "nice guy"; that is why he has survived and prospered this long. Guilty? yes, but probably too stupid to know who the actual puppet masters are.
if he didnt know who the puppet masters were he would not be in this mess. the question that was never asked was, who were the institutions making the withdrawals that precipitated the need for co-mingling customer cash accounts? was it squid subsidiaries, JPM, sovereign funds, hedge funds, who? and why were they allowed the benefit of no claw back.LOI?
Really. The fog of war??
Bullshit, it's money -- not emotions in a bottle.
Let me "jog the expert" with a prediction -- the money will turn up already spent on something meant to playcate the theft (saving Europe).
Holiday bonuses count as spent, too.
Wherever it is, it's being covered up and paved over until the public forgets or a rosy ending can come about (most likely another under-table bailout by the fraud-cartel).
Krasting is still sticking up for this racket, insulting anyone who has every seen combat... shame shame.
All these criminal roads lead to one place any wager that the names scribed on the front door begin with a G and S?
Johnny, you understand that as the CEO of the corporation any financial malfeasance of the corporation whatever they may be discovered to be are your responsibility, so either pay up or be a good little CEO and go to jail.
As a CEO of a corporation you can be held responsible for criminal actions but not for stupidity. It is the corporate veil. Particularly Delaware corporations. All you have to do to protect yourself is to play dumb.
I'm not even sure Sarbanes-Oxley applies to former Senators.
sabanes ox : no teeth?? you know where the ceo and cfo are required to sign off and the 3 monkey defense was no longer valid? WTF
The I am too stupid to have stolen this money defense seems the way this snake is going..DOJ is captured so it may just work
corzines cordite still in the air from a blown up market. he has a dog ate my home work defence. the banna republic continues ---untill it cant
There is an old theory about how Wall Street used circumstances during the Great Depression to strip money from the agricultural regions of the country and force it back into the big banks of the time.
Prior to the GD local and regional banks were holding a lot of wealth and the farming class was growing powerful. The Wall Street crowd did NOT like that. After all, what do people need more... currency or food?
Obviously it is food, and the power had to be stripped from the Ag communities and placed back in the hands of the big banks.
I used to think people that spouted that gibberish were just crazy and anti-Jewish.
The Grange Movement
Me too. I also used to think that the U.S. was attacked by terrorists who "hate us for our freedom." Turns out the crazies aren't quite as crazy as I first thought.
the black interview (thanks JR) above: 1000 convictions of bankers for the savings and loan scandal..why none now: the DOJ no longer is interested in wall st crime..guess I would steal all I could as well, knowing holder will look the other way..it's not a crime, its a regulatory mis step.
and we sheep sit here and go Baaaaa
100% statute of limitations.
Also, those that were going to be convicted had a rushed fraud-trial (Angelo Mozillo) to clear their names before the shit under the rug discovered.
So what you're saying (hypothetically!). The funds left MF Global, but didn't clear into his account and were returned to a JPM account.
Who were trying to stop a COMEX default.
Corzine knew, but couldn't land his fuck buddy Dimon in the shit.
Life at the top eh!
Hmmm....slick big city bankers stole money from a bunch of farmers in the midwest who happen to love guns.
I think Corzine and JPM just stepped on the wrong people.
>>>slick big city bankers stole money from a bunch of farmers in the midwest who happen to love guns.< <<
These predators are not afraid of of bunch of country folk with guns. Unfortunately, those farmers are more likely to use the guns on themselves now that they are left bankrupt and destitute. We have been well-conditioned to blame ourselves no matter how outrageous the theft..."You were stupid...You should have done this, that..."
They are much like Bruce's friend...small potatoes.
The MFG predators are only afraid of other predators...billionaires like themselves...who apparently got tipped-off to the demise of MFG and moved their money well in advance of the "reverse wire transfers."
(I posted the comment below earlier in the thread.)
Bruce,
This story gets more interesting.
Unfortunately, your friend was small potatoes. You had to be a billionaire to get all of your money out of MFG
http://www.huffingtonpost.com/daniel-dicker/the-koch-brothers-and-mf-_b_...
As Gus Grissom once said, "I didn't do anything! The hatch just blew!"
Sevareid: "Virigil I. Grissom"
Grissom: "Gus. Nobody calls me that other name."
Sevareid: "An astronaut named 'Gus'?! What's your middle name?"
Grissom: "Ivan."
Sevareid: "Maybe Gus isn't so bad. Might be something there. Alright, you can be Gus."
They can REVERSE WIRE TRANSFERS? LOI or none, that's just terrifying.
JPM was simply the corresponding bank in this transaction.
They got a money transfer request from MFG, sent it on, then realised the funds from MFG are not coming, and wrote the LOI to cancel the transaction.
There is no way a wire transfer should be reversed that easy without the owner approving. Which means your better off owning gold. There is no escaping the criminal element involved in this mess imo.
At what point does Corzine get thrown under the bus by TPTB...maybe this charade has several acts.
I also agree that the finger somehow points to JPM. I think they have the missing Money.
The thing I kept thinking about last night was the time Corzine spent talking about how he borrowed Money at 2% to buy the Foreign Debt that earned 5%. So, he effectively received at net of 3%. I think that the Borrowed Money to fund Foreign Bond buying has something to do with this.
Could it be that JPM lent them the Money for the Foreign Bonds they bought and when the value of the Bonds fell that JPM demanded additional Money for their Loans? Could MF have given JPM authorization to automatically deduct any Margin Call Money from his Account when they received the Loans?
With the regulation that allows a Broker to invest Investor Funds overnight, it appears to me that the Individual Accounts are not segregated overnight. At this point JPM could have come in overnight and withdrawn the Money for Margin Calls on their Loans, when the Overnight Money was not Segregated and in the Main Brokerage Account.
When your friends wire went out, it could have been that there was not enough Money in MF's Account to honor the Wire.
Also, was wondering if the "Loans" for the Foreign Debt was a form of laundering Money from MF to say JPM or someone else, to later be given to Corzine or split.
If MF gave JPM or someone else, the Money to Lend on the Foreign Bonds then JPM would have a secured position against MF's assets and be paid first in the case of a Bankruptcy. So, the Money could in effect be pulled out of a Bankrupt Company and leave everyone else holding the Bag.
Just seems like something is not Kosher about this situation.
"He is trying to establish that whatever he may have said (or signed), he did not understand the consequences. Whether this is true or not, I don't know."....ignorance of the law does not make you innocent .This creep was a senator .a govenor and a ceo ...he knows perfectly what he did wrong and he will try to bumble his waw out of it just like he did with the taxpayers of New jersey .....I say hang him high
Technically, proving someone committed a crime requires that they had intent and knowingly did it....if you knowingly did something that is a crime, but did not know it was a crime, you are not off the hook. Recently in MN, Somalian women were convicted of giving money to a terrorist groups. They claimed to be doing charity work, and many of their contributions were made to this org for years before it was later labeled a terrorist group. They knowing gave to this org but claimed to not know it was a crime, and nothing on their computers, emails, textxs indicated they knew it was a crime...but they are in Fed prison. I dont think the jury even thought they were trying to skirt law and do bad, but they found they broke the law as the judge presented to them. Legally, you have to intend to do what you did and have to knowingly do it, so Corzine is not claiming ignorance of law but ignorance about his actions, he didn't know accounts were co-mingled, he didn't intend...which of course is BS. Such laws apply to you and I and other 99.9 percent ers like corrupt Blago or inside trader Martha etc....there is always escape hatches for Goldie and JPMers...
Very high, and leave the corpse for the buzzards.
he should have went the way "big" dick bove went....he should have blamed all the assholes who did business with mf, if they didnt have deposits in mf he could not have stole... uh pardon, transfered them to jpm....
His new position is "SGT SHULTZ". He rehearsed well. Now I understand why most actors and actress are Jews. They do it so well.
But if the problem were legal rehypothecation, there would be an audit trail. The accountants would know exactly where the money is and they wouldn't be thrashing around "looking for the money." Nor would the forensic examiners. The money went to the the folks who held the "money" as collateral. So either they are lying or there is another explanation. Flat out looting is a distinct possibility.
For the first time ever I both clicked on and stayed with one of those market report thingies AND bought the offer.
The book offered is actually intended as a Christmas present for a friend of mine, who has the resources to play "the markets", whereas I do not.
He is a likeable man who volunteers to drive myself and other elderly and/or disabled others to our social and medical venues, for instance, but he is (ironically) totally anti-socialist and a believer in the status quo of privatizing everything, despite admitting that he has lost about 50% of his 'investments' since deregulation (of banking) hit hard.
He remains sufficiently 'liquid' to have just gone on an ocean cruise of New Zealand and is alreaddy talking about 'cruising' Alaska, from Australia (where we both live in close proximity).
Ironically he listens to me and I have introduced him to ZH, though the paradox has not hit him that I live on a secure (and minimal) state pension and in a secure (if basic) state housing unit.
I aspire to nothing more.
I accepted the 99% position many decades ago, though my friend and a myriad others still imagine that they are "in with the big boys".
Sure I used to have some fantasies about being at least somewhat successful, but that was long ago.
Whatever: http://w3.newsmax.com/a/aftershockb/video.cfm?PROMO_CODE=C9B5-1
Disclaimer: in no way do I have any interest in newsmax, except that reasonable views are presented ... which might just help my friend from losing ALL of his investments.
Nice story. Please peddle your bullshit spam elsewhere loser.
Money going to Barry campaign - pardon for Johnny. Bet on it!
SP500 new downleg confirmed - bearish triangle chart at blog.
My long term indicators have continued to warn of USD strength and EURO weakness and these signals have increased since 2009. The overdue dollar rally should be substantial.
http://stockmarket618.wordpress.com
Oops, there's the king of off-topic with his jackass proclamations. How is it that you get to advertise here again?
I have just two words for this lying mutherfucker..... lyin'mutherfucker. He's a lyin'mutherfuckder. OK, one word,... but it seems like two.
How about this one - the dog ate that money, all 1.2 billion.
From our vantage point as part of the the 99%, the take-away from this is GET YOUR MONEY & ASSETS OUT OF BROKERAGE ACCOUNTS.
Leaving money & assets in a brokerage account is ASKING to lose it.
I believe this MFG thing is not a one-time deal, but the beginning of widespread looting of customer accounts ...including 401ks and such.
Well surprise - he decided to plead stupid rather than pleading crooked. And it took the best legal minds in the country to come up with that strategy. He could have gotten that just by reading the comments on ZH.
The best way to rob a bank is to own it! Duh!
Hey world! It's The Bankers Stupid!
The questions are:
1) will the truth come out?
2) will Congress close the loopholes that provides the liquidity of their bankster cronies? (repos to maturity "off balance sheet", hypothecation clauses overriding segregation of client accounts to allow off shoring funds for trading in the brokerage's name)
3) would London and other money centers agree to level the playing fields so regulations mean something across borders
4) will 1,2 and 3 matter or just be forgotten when Europe goes ahead and collapses?
So far one would guess no, no, no and yes is the plan being executed.
Corzine knows exactly where that money went. He is lying though his teeth, just like all the other elite who are raping our society of it's wealth with their paper fantasy.
Read:
http://www.wix.com/andrewcostell3/simple-wealth-book
Corzine was sincere when he testified, we could all see the sincerity. Rule one, when you lie, do it wiith sincerity!
http://www.youtube.com/watch?v=vn_PSJsl0LQ
Of course he knows he designed the trade.
Yup
This just in: Corzine is telling the truth. Turns out he was chipping golf balls on the front lawn when the money was stolen
Half truth. Quarter truth. No one asked the right questions so far. I'm pretty sure he owns a cell phone too.