The Case Against Corzine

Tyler Durden's picture

Submitted by James L. Koutoulas, Esq.
President, Commodity Customer Coalition, CEO, Typhon Capital Management

The Case Against Corzine

As the one year anniversary of the MF Global Bankruptcy is upon us, the WSJ has now joined the NY Times in writing a ‘woe is me’ piece on behalf of Jon Corzine. The WSJ continues bemoaning the pitiable situation of “restlessness and frustration” of the former CEO of Goldman Sachs, former Governor of New Jersey, and former Senator from New Jersey who apparently isn’t content with being “confident about the likelihood that he will avoid any criminal charges related to MF Global.” Corzine is still estimated to be worth several hundred million dollars despite presiding over the failure of the largest non-bank commodity broker where $1.6 billion in customer money was stolen. I cry for him, I really do.

Trying to portray Corzine as being focused on mundane things like finding a job rather than worried about doing jail time for his obvious crimes appears to be another prong of Corzine’s attorneys’ use of the Chewbacca Defense, along with saying that the fraud charges “Make No Sense,” because the money “Vaporized” and he had no motive since he had a de minimis portion of his net worth invested in MF Global stock. However, proving Corzine committed fraud and perjury would be relatively simple for any motivated prosecutor. Since the Department of Justice clearly is not motivated to prosecute Corzine after he bundled $500,000+ in campaign contributions to their boss, I provide this quick and easy guide for any ambitious state prosecutor to bring charges themselves:

  1. Corzine’s motive was not making money in the ‘buy a private jet’ sense. It was showing others that he was a great trader to validate his narcissism. In spite of his assertions before Congress that he “Simply does not know where the money went,” Jon Corzine created a totalitarian corporate culture where only yes men were tolerated.
  2. MF Global was under liquidity stress well before the bankruptcy and its executives knowingly used customer funds to meet internal liquidity needs well before its ‘chaotic’ final days.
  3. The customer money did not ‘vaporize,’ and it was not lost via a Rule 1.25 investment- it was knowingly transferred to meet margin calls at JP Morgan, and MF Global executives knowingly falsified segregation reports to provide plausible deniability for the illegal transfers, and made them against CME Group’s express instructions to the contrary.

And, with the details:

  1. Corzine’s motive was not making money in the ‘buy a private jet’ sense. It was showing others that he was a great trader to validate his narcissism. In spite of his assertions before Congress that he “Simply does not know where the money went,” Jon Corzine created a totalitarian corporate culture where he exercised control over every aspect of the business, and only yes men were tolerated.
  1. MF Global was under liquidity stress well before the bankruptcy and its executives knowingly used customer funds to meet internal liquidity needs well before its ‘chaotic’ final days.

  • The firm’s other CFO, Christine Serwinksi, evaluated Steenkamp’s proposal to use customer funds to meet liquidity needs, and told management, in writing, that it would put client assets at risk. From the MF Global, Inc. Trustee’s Investigation Report, page 84:


  • Using customer funds to meet firm obligations became routine months before the “chaos” of the bankruptcy, and MF Global ran deficits in their regulatory obligations well before the ultimate implosion. From the MF Global, Inc. Trustee’s Investigation Report, page 85:

  1. The customer money did not ‘Vaporize,’ and it was not lost via a Rule 1.25 investment- it was knowingly transferred to meet margin calls at JP Morgan, and MF Global executives knowingly falsified segregation reports to provide plausible deniability for the illegal transfers, and made them against CME Group’s express instructions to the contrary.
  • Corzine was in love with his ‘brilliant’ European Sovereign debt trade that he thought would prove just how smart he was to all those who pushed him out of high offices at Goldman Sachs and the State of New Jersey.  He refused to reduce his $6.4B position and only did so after the downgrade. From the MF Global, Inc. Trustee’s Investigation Report, pages 154-5:

  • On October 28th, MF Global UK had an overdraft of $175M in its JPM account. Three JPM Risk Officers called Corzine, and advised him that JPM would not permit MF Global to liquidate further assets until MF Global met that margin call. See MF Global, Inc. Trustee’s Investigation Report, page 139.
  • At this point, Corzine had the choice between admitting failure at his fourth consecutive job, or stealing customer money to try to keep his beloved sovereign debt trades on. He chose to steal.  
  • That morning, MF Global staff prepared a falsified segregation report that they submitted to CME Group that included a $540M manual adjustment with no support for the adjustment, whatsoever. This adjustment allowed them to show a falsified balance of firm excess of $200,178,912 in 4d funds despite deficits calculated by in-house employees of -$341M and -$167M. Obviously, no industry professional would believe that the firm excess could increase during a run on the ‘bank,’ nor would they believe a projection that was so wildly favorable and based on an unsubstantiated adjustment over those that were internally prepared through legitimate data. The only purpose of that adjustment was to provide plausible deniability for senior management to transfer customer money due to an ‘error.’ See MF Global, Inc. Trustee’s Investigation Report, pages 111-13.
  • Then, Corzine explicitly broke the law:

  • Please note that nowhere in the Trustee’s report does it say that either of these transfers were approved by CME Group, despite orders any equity withdrawals must be approved in writing by CME Group’s Audit Department.” (Page 12). That is because CME Group issued no such approvals.
  • Once JPM had the money on back on their books, they shifted into C-Y-A mode and tried to protect itself under the Safe Harbors of the bankruptcy code which would have allowed them to keep the customer money if they could also show plausible deniability as to the origin of the transferred funds. Since they were monitoring the segregated funds closely, they knew that MF Global was undercapitalized, so they deviated from their standard business practices and asked for a ‘comfort letter” whereby MF Global would represent that the funds were not customer funds. MF Global would not sign any three continuously diluted letters because they knew customer money was transferred, just as JPM did. Corzine was directly told by JPM risk officers that they had “regulatory concerns” with the transfers and JPM would be sending MF Global a letter to sign off that the transfers did not contain customer money. See MF Global, Inc. Trustee’s Investigation Report, pages 132-136.
  • Thus, even if one were to buy his plausible deniability based on the falsified segregated funds report, he was still informed of the concerns by JPM three days before MF Global’s bankruptcy. This is in direct contradiction of his Senate Ag Committee testimony where he said he had not learned about the missing customer money until the late evening of October 30thSee Confusion Follows Claim That Corzine Knew of Funds Transfer
  • CME Group Executive Chairman Terrence Duffy followed Corzine’s Senate testimony on December 13th, and, after meeting with David Rosen and myself, pledged to us, “I am going to do the right thing and stand up for customers.” He then deviated from his written testimony and confirmed that Corzine knew of the transfer out of customer segregation. Instead of the Senate arresting Corzine on the spot for perjury or obstruction of justice, the CME, despite being MF Global’s DSRO, was asked to suspend its own investigation shortly thereafter in favor of DoJ and the FBI.
  • Back to the events of October 28th -while MF Global was wiring customer funds out the door per Jon Corzine’s instructions to keep its sovereign debt trades on, it made an intentional change in business practices to redirect customer withdrawal requests from wire transfers to checks, essentially engaging in check kiting. John L. Roe, the VP of the Commodity Customer Coalition— the non-profit organization he and I co-founded in the wake of the MF Global fraud—wrote a detailed memo describing this behavior.
  • MF Global continued to make additional transfers of customer money to JPM and BONY- See MF Global, Inc. Trustee’s Investigation Report, pages 136-142.


To sum up, while Vice President Joe Biden’s “Smartest Guy I Know” was smart enough to not explicitly say “Steal the Customer Money” in an email, there is enough circumstantial evidence, to conclusively prove fraud (and probably perjury) beyond a reasonable doubt.

  • Corzine was well aware of the risk involved with his European Sovereign Debt trades, and fired the risk manager who brought the risk to the board’s attention.
  • Corzine encouraged his yes man CFO Henri Steenkamp to risk deficits in customer segregated funds against the advice of his more experienced CFO, Christine Serwinski.
  • MF Global falsified a segregated funds report to show $200M in firm excess while internal calculations, external JP Morgan calculations, and common sense showed massive shortfalls.
  • That 200M coincidentally is the exact amount (less 170k and change) transferred from customer accounts to MF Global’s house account, with exactly 87.5% of it being transferred to JPM almost immediately following the initial transfer.
  • None of the transfers of customer money to JPM or BONY were approved by CME Group which, as MF Global’s DSRO, required MF Global to have all equity withdrawals pre-approved by them in writing.
  • JP Morgan risk officers notified Corzine personally of their concern that customer money may have been used as part of the initial transfer.
  • MF Global intentionally changed its business practices to favor its own liquidity needs over its customers by redirecting wire redemption requests to checks. This incidentally, would have zero effect on its liquidity position if it was not knowingly misusing customer funds, as unlike banks which may fractionally reserve lend, brokers must have a ratio of customer funds or permitted collateral greater than 1:1, as per CFTC Commissioner Jill Sommers, “EVERY SECOND OF EVERY DAY.”

While no single bullet point proves fraud, taken together, any reasonable person will conclude that Corzine is guilty beyond a reasonable doubt.

Last December, when Rick Santelli asked me if customers would get their money back, I told him, “Damn right they will.” The distressed debt markets agree, as buyers have now paid more than 98% of the face value of customer claims for US designated accounts, and over 93% for claims for 30.7, UK designated accounts. However, the futures industry remains severely damaged as shown by CME’s Q3 profit down 31% as futures customers would rather take counterparty risk with a TBTF bank than trust uninsured clearing houses with ‘segregation’ protection that has proven to be nothing more than a paper tiger by Corzine’s theft. 

If Corzine is allowed to walk, it sends the message to not just the futures industry, but the entire US financial complex, “You can steal customer money from not just commodities accounts, but savings accounts, checking accounts, 401ks, and IRAs so long as you pay Obama 500k in bundled protection money, err, campaign contributions.”  And, while the current administration clearly doesn’t care about the integrity of markets, I do.

So today, for the 1 year anniversary of the day 38,000 farmers, ranchers, commercial hedgers, retirees, traders, and hedge funds were robbed, and 2,800 MF Global employees lost their jobs so an incredibly insecure multi-,multi-millionaire, Jon Corzine, could desperately try and show the world he is a great trader, after all, I renew my pledge to do all that I can to help put him behind bars. I am working with multiple state Attorneys General to help them bring charges once the DoJ officially closes their ‘investigation.’ And, I have another little trick up my sleeve that I assure you that Corzine’s high-priced lawyers haven’t thought of, so stay tuned.

So, Jonny Boy, keep pretending how you did nothing wrong and you’re just bummed out that you haven’t gotten back to work being an awesome hedge fund manager. I hope your 500k bought a Presidential Pardon along with the DoJ’s silence, because the law is coming for you and you’re going to need it.


James L. Koutoulas, Esq.
President, Commodity Customer Coalition
CEO, Typhon Capital Management

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Neethgie's picture

The case for corzine, "i know everyone who is important fuck you"

Real Estate Geek's picture


"He's not?  Seriously?  Oh, uh . . . nevermind."

vast-dom's picture

Tyler et. al. come on now! Even if Corzine received any jail time it would be in a minimum security Federal pen more at resort where we would play golf and eat exceedingly well and talk shop with the other 3 banksters in there.

The only way to truly punish this man would be to strip him of all of his money and see how well he adjusts to serving the common man a mochafuckyouchino at the local Starfucks, where his pay would be partially docked until he repays his victims. And you know he'd brew a most foul drink and fuck that job up too.

WALLST8MY8BALL's picture

"Life Stinks"  starring John Corzine as Goddamn Dolt!

TruthInSunshine's picture

The case against The "Honorable" Jon S. Corzine:

The doctrine of res ipsa loquitur, literally the thing speaks for itself, permits a jury to infer negligence when no direct evidence of negligence has been introduced. ... The doctrine of res ipsa loquitur applies only when two prerequisites are satisfied. First, the situation, condition or apparatus causing the injury must be such that in the ordinary course of events no injury would have occurred unless someone had been negligent. Second, at the time of the injury, both inspection and operation must have been in the control of the party charged with neglect. Giles v. New Haven, supra, 228 Conn. at 446. When both of these prerequisites are satisfied, a fact finder properly may conclude that it is more likely than not that the injury in question was caused by the defendant’s negligence. (Citations omitted; internal quotation marks omitted.)” Barretta v. Otis Elevator Co., supra, 242 Conn. at 173-74.Godwin v. Danbury Eye Physicians and Surgeons, P.C., 254 Conn. 131 (2000).

Proving fraud,, in either the context of tort or criminal law, involves satisfying many more elements and requires quite a bit more effort, but one doesn't even need to go there, bitchez, as criminal negligence would suffice (though a determined and competent prosecutorial team could most likely flush out a prima facie case for fraud, involving even more actors than on Honorable Jon S. Corzine, and probably be able to "bundle" it into a conspiracy, collusion and maybe even racketeering case, if that team so desired), bitchez.

Colombian Gringo's picture

Just hang the bastard by his balls.

GetZeeGold's picture



That would have worked...but he doesn't have any balls. Neither does the the WSJ.

strannick's picture

Dear CFTC;

Congratulations on being corrupt or moronic (probably both).

The same CFTC whose non corrupt Chairman Brooksley Born got run out of Washinton for standing up to derivatives corruption whose story was so well told in The Warning by PBS. The same CFTC whose retiring CFTC Judge Painter revealed that CFTC Chairman Wendy Gramm told him to never rule in favor of a manipulation claiming plaintif.

If you want to see a kangaroo court, watch CFTC Commisioner Jill Sommers interview Corazine before letting him off the hook. CFTC Commisioners Jill Sommers, Bart Chilton, Scott OMalia and Gary Gensler enable banker corruption at the expense of the commodities market, a market whose pricing affects everyone in the world.

Be sure to email the Commisioners and tell them what you think of their performance in providing cover for Corazine to rip off investors via MFG for JPM.

Jill Sommers

Bart Chilton

Scott OMalia

Gary Gensler


Whoa Dammit's picture

Just turn him loose in the Midwest farm country wearing a t-shirt that says "Hi my name is Jon Corzine" Problem would be solved. 

A former neighbor who was from Iowa had a  favorite saying : "Gee, I ain't had this much fun since the hogs ate my little brother."

ATM's picture

A little of our country justice would do that fuck head some good. They wouldn't find an ounce of him but maybe a few hairs in some swine shit manure we spread on the beans.

That SOB would get a good, long as whooping that would make a whole bunch of farmers around here quite happy.Then toss his stinking corpse intot he swine pen and, as they say in New Joysee, Fuhgetaboutit!

insanelysane's picture

Martha fucking Stewart did time and this piece of shit is whining about not being in the game.

Big Corked Boots's picture



Martha Stewart = cooks

Jon Corzine = cooks the books

Buck Johnson's picture

"At this point, Corzine had the choice between admitting failure at his fourth consecutive job, or stealing customer money to try to keep his beloved sovereign debt trades on. He chose to steal."  And that is the truth, it truly is.  He made a decision ot admit failure or steal and he decided to steal pure and simple.

hedgefunddartthrower's picture

This is probably an accurate picture of what was in his head at the time. However, Corzine most certainly thought also about the consequences of his stealing client money and spoke with his legal team. And they most assuredly thought long and hard about the chances of Corzine going to prison. And they concluded that in the aftermath of the biggest bankster scam of the century (i.e. 2008 government bailout of the banking system) and the fact that NO ONE has to date been prosecuted for any of the fraud and theft that took place which resulted in the near meltdown of the entire banking system, that stealing money from client accounts and bankrupting MF Global would more than likely go unprosecuted - especially with the "Honorable" Mr Corzine running the show and cutting checks to all of the  senate and house senior members controlling the banking committees. No one knows this better than Corzine, who is and has been a crook on both sides of the government and private sector fence. Sometimes I wonder why some screwed investor who lost everything in the Corzine MF Global scam hasn't taken justice into his own hands and made an example out of Corzine. 


ChanceIs's picture

How about calling it a hate crime.  You know....Corzine hated his clients.  What the hell.

Our DoJ has gotten soft.  They don't seem to want to prosecute unless they are SURE they will win.  Why does one need to be SURE in order to bring an case/indictment?  I mean....wouldn't a 2% chance of conviction suffice?  It isn't as if Corzine can't afford a defense attorney.  Congress prosecuted the daylights out of Bill Clinton for coverting with Monica - or was it lying to them about Monica.  Congress prosecuted Roger Clemmons when it asked him the steroid equivalent of whether he had stopped beating his wife.  Please.  Toying with a baseball pitcher....and not going after Corzine?  Andy Fastow is still in jail.  He had pull with the Bushes.

Franklin Roosevelt loathed Andrew Mellon and prosecuted him at every opportunity. I think that J.P. Morgan (the person) was also hassled personally by the federal government.  Speaking of which check this out from Wiki.  JP swapped gold for 30 year Treasuries.  You wouldn't see that happening today.  Quite the opposite.


Treasury gold

In 1895, at the depths of the Panic of 1893, the Federal Treasury was nearly out of gold. President Grover Cleveland accepted Morgan's offer to join with the Rothschilds and supply the U.S. Treasury with 3.5 million ounces of gold[7] to restore the treasury surplus in exchange for a 30-year bond issue. The episode saved the Treasury[8] but hurt Cleveland with the agrarian wing of the Democratic Party and became an issue in the election of 1896, when banks came under a withering attack from William Jennings Bryan. Morgan and Wall Street bankers donated heavily to Republican William McKinley, who was elected in 1896 and reelected in 1900.

markmotive's picture

Corzine can bunk with Madoff.

steelhead23's picture

Some things should be left to professionals.  Here in Portland, we take our coffee, very, very seriously and greatly admire baristas.  Thieving CEOs?  Not so much.

unrulian's picture

i get your point..i guess...i'd have to think long and hard who i'd rather be locked up with for 20...a barista droning on about aroma and subtle undertones or a thieving bankster....i think i'd take the needle

FreedomGuy's picture

Yeah, I actually like most baristas. They are usually pretty cheerful, sociable and get it just right on the coffees. Why ruin their reputation with an elitist CEO-politician?

MountainMan's picture

Great stuff, but you're preaching to the choir.

RockyRacoon's picture

Anybody who is anybody already knows all this, as you say.   I'd say that the prosecutors love their families and want to see them safe.  Hence, no prosecutions.   Can't be more complicated than that.

NotApplicable's picture

Meanwhile, the average "informed voter" has not a clue that their precious government is engaged in ongoing, high-stakes criminal activities, and have no idea what the collapse of MFG was about, if they're even aware of it at all.

My guess is that the author of this article will be taken down long before Corzine ever will, as he is part and parcel of "The Big Lie" that is to be protected at all costs.

RockyRacoon's picture

Nuh-uh.  Wasn't referring to that.  No way.

(I like my family too.)

kaiserhoff's picture

Looks like there is plenty here to support RICO charges.  That would wipe the smirk off his face.

NotApplicable's picture

Like you'll find a judge that isn't part of the racket (or has weaknesses, such as family members).

FreedomGuy's picture

Holy shit! You cannot write this stuff. Grisham should start with this.

Corzine, for me is the perfect poster child for the crony-fascist state. He was a governor, inside trader, CEO...all the things you would hate unless you are a Democrat. He puts the lie to the propoganda line that Democrats care about the little people as he bankrupts states and businesses while flouting laws and staying rich himself. My favorite Corzine moment is when he crashed his State Trooper driven SUV traveling at over 90mph, no seatbelts on wet roads. There is a metaphor in there.

I passionately despise him and those like him almost as much as the people who will let him off the hook.

Do you think Corzine has a big interest in the outcome of the Presidential election?

If he gets off without prosecution it is time to storm the bastille. You will have the irrefuteable proof that we are a nation of power and favors and not law and justice.

Unprepared's picture

The Corzine Vaporized Formula (c)


Take a pinch of real asset from segregated accounts

Slice and dice

Dissolve in a fair amount of ZIRP-supplied liquidity

Set the heat to 50:1 leverage degrees

Slowly mix.

Gardually increase heat to a boiling point

Collect, dry and repackage the foam in isoteric derivatives

Serve profits to yourself

Add liquidity to make up for the loss

Rinse, repeat.


Important: this is a secret family recipe, so if the whole thing goes in smoke and if asked say "I know nutting".

Madcow's picture

"In God We Trust" -> "If you're not cheating you're not really trying"

12ToothAssassin's picture

Its only cheating if you get prosecuted.

Lost Wages's picture

We've known all this for about a year now and nothing has been done. Is the case at a standstill? Are they just going to hope we forget or let the statute of limitations run out?

RockyRacoon's picture

The poor bastard may meet with an unfortunate boating or airplane accident once the "case" has cooled off a bit.  I'd say the clock is running out on ole Corzine.   It'll be a shame, I know, but necessary to provide cover for others not yet in the limelight.   Conspiracy?  Not if there is no other conspirator named.

putaipan's picture

conspiracy? at the risk of repetition i linky again.....( and yes corrazinne is named) -

RockyRacoon's picture

Yeah, saw that.  Funny how that story is like a Halloween ghost isn't it?  One minute it's headlines, next it's lurking in the shadows.   Gawrsh!  Ya think there might be a conspiracy going on... trying to hide the conspiracy... that is covering up a conspiracy?  Nah.  Couldn't be.

kaiserhoff's picture

Can I sign up now to be on that jury?

GetZeeGold's picture



Probably not....since you already know he's quilty.


NotApplicable's picture

What case are you inquiring about? AFAIK, there isn't a single one left.

object_orient's picture

If Romney wins, DOJ indicts immediately. Obama pardons Corzine on last day in office. If Obama wins MFG gets swept under the rug.

11b40's picture

Romney will do exactly as Jamie tells him to.  Much like Obummer.

WillyGroper's picture

I love this partisan bullshit, as if both parties did not have a hand in this epic biblical clusterfuck. 

Let's see if the elections are held, or perhaps m@rti@l law could be be declared.  

rehypothecator's picture

Can Obama pardon Corzine, if he hasn't been charged with a crime yet?  

putaipan's picture

preemptive pardoning. endless bailouts.

mjcOH1's picture

"We've known all this for about a year now and nothing has been done. Is the case at a standstill? "



"Are they just going to hope we forget or let the statute of limitations run out?"

In less than a week there'll be an election.   And there is a (slight) chance that in spite of the inevitable demographic tide, somebody will be without the cover of the Party in January.

Yen Cross's picture

I think Corzine needs a "continuing-Ed" class in Commingling client funds.

 I hear 'Rikers Island' has a great curriculum...

Bolweevil's picture

Fwd to Chumbawumba, he'll sue Corzine.

RacerX's picture

why this fucker is still out walking the streets is beyond me. Talk about blatant, in-your-face corruption.

heck I think even in China they'd have this guy strung up.

WillyGroper's picture

His vital organs would have already gone to the highest bidder.