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CME Chairman Testifies To Congress: "A Senior MF Global Employee Indicated To Us That Mr. Corzine Knew Loans Had Been Made From Customer Segregated Accounts"

This is a must see.  More evidence that Jon Corzine is guilty:

CME Group Chairman Terry Duffy tells the Senate that CEO Jon Corzine knew loans were made from customer accounts - Dec. 13, 2011.

Eric Holder: What the hell else do you need to hear?

The senior employee's name is undoubtedly Edith O'Brien.

O'Brien is the key to this case and she's not talking, at least publicly, but that hasn't stopped Corzine and his lawyers from implicating her for the impermissible transfers to JPMorgan.

She's not a lightweight:

Ms. O’Brien is considered an expert of sorts on the protection of customer money at futures firms.  In the last year and a half, Ms. O’Brien has made several appearances before the Commodity Futures Trading Commission.  On at least two occasions, she was a panelist at roundtable discussions held at the agency on the topic of safeguarding customer money, and also attended at least three meetings with agency officials, including one titled “Practicalities of Individual Customer Protection.”

Slammed by Corzine:

“I had explicit statements that we were using proper funds, both orally and in writing, to the best of my knowledge,” he told the panel. “The woman that I spoke to was a Ms. Edith O’Brien.”  But JPMorgan was not satisfied. The bank once again contacted Mr. Corzine, this time requesting a guarantee in writing. Mr. Corzine handed the request to his general counsel, Laurie Ferber. Ms. Ferber would not authorize the document, according to one of the people close to the investigation, saying the firm did not offer such special assurances.

Two days later, at about 6 p.m. on Sunday, Oct. 30, Ms. Ferber notified regulators that there was an apparent shortfall in customer money. She blamed an accounting error, according to the CME Group, the firm’s primary regulator and an exchange where it conducted business.

At about 1 a.m., Ms. O’Brien and another executive in Chicago told the exchange that the shortfall in the customer accounts was real, according to the CME.

Continue readng at Dealbook...

Janet Tavakoli adds detail:

Jon Corzine claims he didn't know about improper transfers of customer funds and of shortfalls in customer accounts until October 30, yet on Thursday, October 27, four days before the bankruptcy and again on Friday, October 28, three days before its bankruptcy, dozens of MF Global customers asked for wire transfers when they closed accounts, and they didn't get them. Instead, MF Global wrote paper checks and sent the checks via snail mail. The checks bounced, since customers received them after MF Global declared bankruptcy on Monday, October 31.

Clients Raise Questions About MF Global Checks - NY Times Dealbook

MF Global and the Rubber Check - Reuters

More from Janet:

On October 28, JPMorgan didn't buy Corzine's story, either. Having been a risk manager myself, I believe Barry Zubrow, JPMorgan's chief risk officer, did exactly the right thing. He called Jon Corzine to get him to verify that the funds belonged to MF Global and that none of the money was customer money. Zubrow, an outsider, was well aware of the possibility that customer funds had been transferred. It's implausible that Corzine wasn't aware of the potential impermissible transfer of customer funds when he gave the authority to make the transfer. By doing its job, JPMorgan removed Corzine's ability to credibly deny knowledge of the potential problem.

As for JPMorgan, it asked Jon Corzine for a signed letter stating that the transfer was legitimate. He reportedly responded: "Send me the letter and we'll have our people look at it." It was disingenuous of Jon Corzine to pass JPMorgan's letter to Edith O'Brien to sign given that it asked for a sign-off that all "past, present and future" transfers complied with the law. Ms. O'Brien would have been asked to take responsibility for all transfers without having the authority over them. Jon Corzine had the broad authority to sign the letter, but by passing it on, he effectively stalled.

JPMorgan sent additional versions of this letter in response to MF Global's requests for revisions, but JPMorgan never received a signed letter back.

Eric Holder: Appoint a Special Prosecutor Now.



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Reader Comments (10)

More on Edith O'Brien in this piece by Janet Tavakoli.

Aug 20, 2012 at 6:43 PM | Registered CommenterDailyBail
MF Global customers who closed their accounts in the brokerage firm’s final days have been fuming for months about how the firm mailed checks to them, instead of promptly transferring the money electronically as usual. Many of those checks arrived after the bankruptcy filing, and subsequently bounced.

Aug 20, 2012 at 7:20 PM | Registered CommenterDailyBail
Corzine, go ahead & screw rich &/or powerful investors. Wonder what will be the outcome ?
Aug 20, 2012 at 11:53 PM | Unregistered CommenterTR
I see a future Presidential candidate here.
Aug 21, 2012 at 12:44 AM | Unregistered CommenterS. Gompers
When there is finally none of the 99% to screw anymore out of money the parasites will have no choice but to start feeding off of themselves.Headlines will be of wealthy people dying of mysterious circumstances.For once the MSM will have something to read about and to look forward to reoccurring incidents.There just might be some happy days in the near future yet!!
Aug 21, 2012 at 2:41 AM | Unregistered CommenterS.W.P.
Eric Holder will do nothing of the sort: he helped design the ludicrous MERS system when engaged at the law firm from which he was hired to the Justice Department.

As an intellectual exercise which will win you 0.007 vital points on a standard IQ test please state whether you can spot the obvious mistake. For 0.5 extra points, desccribe the error.

Or ask ask you five year old. If you haven't got one of those, consider joining the world-wide uprising against the status quo.
Aug 21, 2012 at 5:40 AM | Unregistered CommenterBud Butley
In the same Senate hearing, Corzine himself, along with MF Global's CFO (Henri Steenkamp) are asked if they knew about money transferred from customer acccounts. Their responses fully confirm the accuracy of Duffy's testimony.

The question is put to them as follows:

Q. Did any of you authorize, approve, or know of money transferred from customers’ segregated accounts to the firm’s broker-dealer accounts in the final days or weeks of MF Global, or before then?

Steenkamp answers the question:

A (Steenkamp). Senator, I did not authorize, approve, or know of any transfers of customer funds for any house broker-dealer purposes.

Corzine evades the question as follows:

A (Corzine). Senator, as I said in my opening remarks, I never directed anyone at MF Global to misuse customer funds, never intended to, or as far as I’m concerned, never gave instructions that anybody could misconstrue.

Q. So you’re saying you did not authorize, approve, or know of fund transfers?

A (Corzine). In a general sense, there are all kinds of money transfers that are taking place. Any time there is a sale of $1.3 billion’s worth of commercial paper, there will be fund transfers associated---

Q. I’m talking about broker-dealer accounts, though, and when we’re looking at leading up—you know what I’m asking you in terms of final—

A (Corzine). That’s why I’m trying to be very direct in saying there was no direct authorization. I was not aware that the unreconciled accounts existed until that Sunday evening that we talked about.

http://www.ag.senate.gov/hearings/investigative-hearing-on-the-mf-global-bankruptcy (1:48:00 mark)

In other words, Corzine--despite the thrice offered oppourtunity to do so--left wholly unrebutted Duffy's testimony that Corzine knew that customer segregated accounts sourced the transfer out of the company.

That hearing was on 12/13/11, and the MF Global witnesses (unlike Jamie Dimon) were put under oath. (1:26:00 mark) I mention this because in his evasion Corzine did testify as follows in response to the question: "there was no direct authorization."

Four months after the hearing, a House investigation indicated that with those 5 words, Corzine very likely perjured himself:

"an internal email from MF Global assistant treasurer Edith O'Brien saying that the $200 million transfer came 'Per JC's [Jon Corzine's] direct instructions.' This money, sent to JPMorgan Chase (JPM, Fortune 500) to cover an overdraft, came from customer accounts, the memo says."


Like the DOJ, however, the bought-and-paid-for Senate utterly failed to investigate the matter.
Aug 21, 2012 at 8:23 AM | Unregistered CommenterCheyenne
Congress puts on a puppet show that they are investigating the crime and then, after months of hearings, nothing happens. It's just career, corrupt politicians trying to get re-elected.

Need to read this book cause it's about Americans who wake up & take a stand against federal tyranny. It's so real & about D.C. (District of Corruption) so I recommend it.


Both political parties force their candidate on us and the media supports them. Thank goodness for the Internet and we can read what is really happening. Great article. THanks.
Aug 21, 2012 at 12:35 PM | Unregistered CommenterMountainHome
I guess the Government decided protecting Banker criminals and not investigating or prosecuting them is not enough. Joining in and helping the crooks steal everything before the crash hits is the way to go. After all, private island and missile silo hideaways are very expensive.

Aug 21, 2012 at 1:11 PM | Unregistered CommenterSagebrush
The entire federal government is corrupt and so are most banksters and wall streeters . The only cure for the disease infecting the entire economic and political system in America (and the civilized world) is a total collapse of the economy and the monetary system. The system is too corrupt to ever be fixed by anyother remedy than self destruction from within, and the day of reckoning is coming, but, the big question is when.
Aug 21, 2012 at 5:46 PM | Unregistered CommenterJitterbug

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