As PFG Falls, a Return to the MF Global / Eric Holder Connection and How to Keep an Investigation Stale

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When facts, data and information are gathered, dots can be connected to reveal relationships and new information as patterns emerge.

There is a pattern.  Scratch just below the surface of who is who and we find the intricate network of power players and patterns of events circling the MF Global crimes.  I am not talking about Governor-Senator Jon Corzine, but Eric Holder, Edith O’Brien and Reid Weingarten.  Who is Reid Weingarten?  “Defense attorney Reid H. Weingarten is a Washington fixture,”  Brook Masters of  The Washington Postwrites.

Weingarten, a long time close freind of Eric Holder is also Edith O’Brien’s  defense attorney.  O’Brien is apparently seeking immunity from Holder’s Department of Justice because she, and she alone, holds the threads in the investigation of the illegal use of customer funds at MF Global, Inc. and Holdings.  To date, after eight months, she has not received immunity.  (Yet notably the DOJ has already granted Barclay’s Bank immunity from prosecution for cooperating in its Libor-gate investigation.)

With time, evidence becomes stale to a prosecution.  The longer she is kept off any witness stand and the longer DOJ waits to uncover all evidence, the weaker discovery becomes.  Putrefying the evidence through delays and time decay is a tried and true practice.  So it is reasonable to ask if there even a desire by the DOJ to uncover all the facts of the plundering of over 1.6 billion of private funds and build a case of wrong doing?

O’Brien can blow open the investigation

It was Edith who clarified to CFO Christine Serwinski that a shortfall of over $1 billion (depending on how it is counted) resulted from messy and hastily carried out transactions in the days before the bankruptcy filing.  O’Brien made the transactions, she knew where the money came from and where it went.  Very early on, it was known that an-mail from O’Brien noted that one major transfer was done “Per JC’s [Jon Corzine's] direct instructions.”  Yet to date, we hear nothing from her, nor are there charges against her.

It was Edith O’Brien who was asked by MF Global general counsel, Laurie Ferber, to sign a letter to JP Morgan confirming that no customer funds were being sent to the bank.  Even under pressure of Executive staff, she refused to sign the overly-broad, bogus statement Ferber asked her to sign.  It is of note to remember that JP Morgan’s chief risk officer, Barry Zubrow personally called Jon Corzine asking him to verify that no funds transferred belonged to customers. Barry did not call Edith O’Brien.

Recall that under oath, Corzine pinned O’Brien by name as the one who provided assurances to him that all transfers were legal.

Eric Holder’s friendship with Edith’s attorney is very close, goes back years

When the DOJ is on your back, friendships and access goes a long way.

The personal and professional relationship between Holder and Weingarten go back decades:  As young attorneys, they worked together in the Public Integrity section of the DOJ in the late 1970’s.   There, as reported in Main Justice, they became “best friends.” In the 1980’s, Reid left the DOJ for the rich pastures of partnership with Steptoe & Johnson.

In 1997, Weingarten and Holder raised money together to launch a non profit foundation in the District of Columbia. Weingarten’s bio states that “He is the chairman and co-founder, along with US Attorney General Eric Holder, of a non-profit program, See Forever Foundation, which is designed to assist juvenile offenders in rehabilitation to prevent recidivism.”

As Weingarten was in the private sector, Holder remained with the DOJ only to come under investigation in 2001 for what was determined to be his inappropriate influence on the final approval to pardon fugitive, Marc Rich.  Here, it is agreed by many that Holder massively blundered when he overstepped White House legal counsel opposition and gave a DOJ seal of support for the pardon. This was said to have “significant impact” for the final green light on the Marc Rich pardon fiasco.

When Holder came under investigation for his heavy hand in the Rich’s pardon, Reid Weingarten was his personal and strong-armed defense attorney as reported by Eric Lichtblaue and David Johnson of the New York Times in 2008.

More recently, and shortly after Holder took over the reins of the Department of Justice, hehired Weingarten’s son, Ross Weingarten for a job with the DOJ as a press staffer.

When in trouble, hire a lawyer with friends in high places: Roman hires Reid with Eric

Fugitive Roman Polanski hired Reid Weingarten in 2009 to get the DOJ off his back in their efforts to extradite him back to the US. Reporting on this, Main Justice cites Weingarten as “a well-known criminal defense lawyer and close friend of Attorney General Eric Holder.”  Efforts to extradite Polanski to finally face charges of drugging and sodomizing a 13-year old, garnered lots of media attention.  But that case was quickly quashed for still-inexplicable reasons. But we do know this: the DOJ refused to release evidence to the Swiss authorities which would enable them, under Swiss law, to extradite Polanski to the US.   The question of possible help for Polanski from the DOJ is raised by by many including U.S.  Supreme Court-admitted attorney, James Hirsen in 2010.

Cases going cold among friends

In another twist on the pattern of investigations with the Holder/Weingarten connection: ironically, the DOJ attorney handling the Polanski case as represented by Weingarten  was none other than Mr. Nick Marsh.  Marsh had worked in the same Public Integrity Section as Holder and Weingarten, only to be moved out of it and into the DOJ Office of International Affairs, after he came under criminal contempt of court for handling of evidence in thefailed Sen. Ted Stevens prosecution. (A foreshadowing of fast and furious leading to the Holder Contempt of Congress ruling?)

Edith Hires “Washington Fixture” Reid Weingarten

O’Brien’s attorney is perhaps THE top white collar defense lawyer in the country.  Not only has he defended some of the biggest names in white collar crime (Ebbers of World Com, Lay of Enron) and the high profile Hollywood Director above, last year he was also  retained by none other than Lloyd Blankfein, CEO of Goldman Sacs. His hourly rate?  Surely north of $1,000.

So how did a mid level Assistant Treasurer from a minor Brokerage come to one of the most expensive and politically connected white collar criminal attorneys in the country?  How can she pay the fees that will surely go into six figures if not more?  Who pointed O’Brien to Weingarten, or rather, Weingarten to O’Brien?

MF Global Employees and officers have coverage under the firm’s Professional Liability Insurance, which also covered employees of the brokerage unit. A review of the court filings show that Ms. O’Brien is named in six ongoing suits against the company, which appear to be covered by the insurance policies.

However, as of late last winter, coverage on ongoing legal counsel on DOJ actions are not revealed by the court documents.  But for now, let’s assume the millions in MF Global insurance policies will pay for all her massive legal fees.

How did she hook up with the most connected white collar crime attorney in the nation?  The Yellow Pages?  Her friends?  Of course not. We can be sure Edith does not travel in the same circles as Reid.  The hookup took place just as any between a high profile attorney and an unknown client:  An introduction from high places.  He was surely recommended to Edith by someone powerful in the ranks of MF Global. By whom?  At this point, we can only assume.  My guess is Laurie Ferber.  She was the MF Global general counsel and had ongoing working contact with Edith.  Edith may not have even known she was heading for possible criminal charges.  Ferber, of course, understood this.  And it would have been in her capacity to advise O’Brien of her need for very strong legal representation, and who she should hire concerning professional liability with MF Global. (Remember, it was Ferber who worked on the drafts of letters to JP Morgan concerning the legitimacy of the funds and requested that Edith sign the letter.)

Further, it is not unreasonable to surmise that Jon Corzine may have pointed Ferber to the Weingarten name for Edith.  A fix was clearly needed for all and Edith, as Corzine testified, had the keys. Both Corzine and Weingarten’s paths crossed in the political arenas. Weingarten is, like Corzine, a major Washington, D.C. insider.  They personally knew each other. And with Weingarten’s connections deep into the DOJ and the past magic he worked? He would be their man.

What is the game plan?

We wrote earlier that a fix for MF Global executives was worked by feigning chaos, confusion and convincing the world that “Edith did it!” (See The Big Fix was In)

But there is more to the fix, much more.

1. Senior MF Global executives possibly “helping” Edith O’Brien by setting her up with the top and most connected Washington. D.C. criminal attorney in the country.  An attorney who is personally and deeply connected with Eric Holder, Director of the Department of Justice.

The same attorney who represented Polanski, only to have the case somehow mysteriously fall apart after the DOJ suddenly refused to release information to the extraditing authorities.  (An example of what now appears to be the ongoing  DOJ modus operandi — one that also recently resulted in Holder’s recent contempt of Congress charges.)

2. Stall for time and do not offer immunity.

3. At the same time, do not press any charges against executives due to lack of evidence.  This way the case will surely “go cold.”  Then, prepare the public for this outcome as seen when early reports anonymously leaked to the New York Times from federal investigators on investigations going cold. Information from those on the “case who were not authorized to speak publicly about the investigation.”

4. And, because Reid Weingarten is also sort of working for Edith –  with MF Gloal insurance policies  paying for him — make sure that no charges are ever pressed against Edith.

Voilà!  It is fixed and the stalemate is in.  Everyone is safe. Investigative failure is assured, just as a series of earlier high profile investigations under the current DOJ have also failed — from the Ted Stevens prosecution to the Polanski extradition, to the ongoing gun running investigation. And now for MF Global.  It works every time!

And now we hope?

The FBI is a division of the Department of Justice. Louis Freeh is not only the former head of the FBI under the DOJ, but is the Trustee for MF Global. We can make our own conclusions about that apparent conflict of interest.

A few months ago over 64 members of Congress called for an independent investigation of MF Global due to increasing perceptions of a conflict of interests between Mr. Corzine and the Department of Justice.  And now the closer we look, the stronger the smell of conflicts and a pattern of heavy hands at the top.

We now can only hope that Congress finally moves to appoint an independent investigation of MF Global without motivations of petty partisan posturing, but of responsibilities of honest leadership for which they were elected.  We can only hope, it is eternal.

Nick Knight

July 7th, 2012


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