Rep. Grimm Leads Call for Criminal Investigation of Jon Corzine for Perjury

Aug 2, 2013 Issues: Financial Services

WASHINGTON, DC – Today, Rep. Michael G. Grimm (R-NY) led 17 fellow House Members on a letter to Attorney General Eric Holder calling for a criminal investigation of Jon Corzine for possible perjury while testifying to Congress. Jon Corzine’s testimony before three Congressional Committees – including the House Financial Services Committee - contradicts evidence revealed in a civil complaint filed by the CFTC on June 27, 2013.

“As a former federal law enforcement agent, I take the rule of law very seriously. The recorded conversations transcribed in the CFTC’s civil complaint provide evidence that Mr. Corzine had knowledge of illegal transfers – a fact he denied to Congress. It is outrageous and unacceptable to let this discrepancy go without a formal criminal investigation.  Mr. Corzine has a duty to be honest with the customers from whom he stole money as well as the Members of Congress to whom he testified. Any refusal to move forward with an investigation would be a gross injustice.”

Rep. Grimm has led previous efforts regarding MF Global. On May 14, 2012, he led 64 House Members in a letter calling on A.G. Holder to appoint a special counsel in the MF Global investigation.

Rep. Grimm is served over a decade in the FBI working deep undercover investigating financial crimes. He is a member of the House Financial Services Committee.

###

The text of the letter is below:

August 1, 2013

The Honorable Eric Holder
Attorney General of the United States
U.S. Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530

Dear Attorney General Holder,

We are writing to request that the Department of Justice re-examine the criminal case against Jon Corzine, the former CEO of MF Global. In light of the civil charges filed by the Commodity Futures Trading Commission (CFTC) on June 27, 2013 against both Mr. Corzine, as well as Edith O’Brien the former assistant treasurer of MF Global Holdings, we believe a revisiting of the criminal probe into this matter is warranted. In addition, we urge you to broaden the scope of your investigation into the actions of Mr. Corzine to include the possibility that Mr. Corzine perjured himself before three Congressional Committees during hearings held to examine the collapse of MF Global in December of 2011.

The CFTC complaint lays out, in disturbing, previously undisclosed detail, how deeply involved Mr. Corzine was with the criminal transfer of segregated client funds during the final days of MF Global. The complaint discloses several recorded phones calls in which Mr. Corzine discusses ways to use client funds as a means to clear trades for the firm’s book more quickly. Pages 23 and 24 of the complaint read as follows:

“On the afternoon of October 27, Corzine spoke to Employee #1 on a recorded telephone line to strategize how they could use customer segregated funds to induce JPM to clear MF Global’s trades more quickly:

            Corzine: We have a money management account at Chase, if my memory serves me

Employee #1: Yeah, it’s the JP Morgan Trust account, but that’s cash seg for clients -- it has nothing to do with greasing our wheels for Chase to move.

Corzine: I understand but you put it in a tri-party, and then once the securities have started moving, then you move it back to the, um --this is the same thing we did last night, they left it in the tri-party, the seg money.”

The complaint goes on to outline how Mr. Corzine was aware, well before the firm’s bankruptcy on October 30, 2011, that MF Global had illegally transferred customer segregated funds and that there was a massive shortfall of client money, as outlined on both pages 24 and 27 of the complaint:

Page 24: “Corzine and O’Brien received documents reflecting that, as of the close of the prior business day (Wednesday, October 26), the Firm’s excess funds in customer segregated accounts totaled approximately $116 million, and the overall FCM Excess Cash (combining segregated and secured balances) was negative $341 million. The negative figure signaled that the Firm had once again violated Firm policy.”

Page 27:  On October 27, “at approximately 8:45 p.m. ET, Employee #2 told Corzine on a recorded telephone line that some of the funds O’Brien had transferred from the FCM to help satisfy MF Global’s proprietary obligations had not been returned. Corzine asked if she had received back “enough to be in compliance,” and the employee responded, “no, she[’s] indicating she’s net short $106 million.” Corzine thereafter instructed the employee to “raise hell” with JPM to obtain funds from the secured revolver to “cover up” the gap left by transfers of funds that were not returned. Corzine did not receive assurances that the funds were returned.”

If the previously mentioned evidence of the criminal misappropriation of client funds were not sufficient to bring criminal charges, then surely these newly revealed recorded conversations cast enough doubt as to the honesty of the testimony Mr. Corzine provided to the House Committee and Agriculture, the Senate Committee on Agriculture and the House Financial Services Sub-Committee of Oversight & Investigations to warrant a perjury investigation at the very least. Before these committees Mr. Corzine made the following oral and written statements:

  • "I simply do not know where the money is."  -made in written and verbal testimony before House and Senate Agriculture Committees (Dec. 7, 2011; Dec. 13, 2011)
  • "I was stunned when I was told on Sunday October 30, 2011, that MF Global could not account for many hundreds of millions of dollars of client money.” - written testimony to Senate Agriculture Committee (Dec 13, 2011)
  • "I did not, however, generally involve myself in the mechanics of the clearing and settlement of trades, or in the movement of cash and collateral."  - written testimony to Senate Agriculture Committee (Dec. 13, 2011)

Clearly, these statements are contradicted by the newly released recorded conversations involving Mr. Corzine prior to MF Global’s bankruptcy. It is clear that he knew where the money was; it had been transferred to JPMorgan Chase (see pages 23 and 27 of the complaint.) Obviously, he did, in fact, involve himself in the movement of cash and securities (see pages 24 and 27 of the complaint). Finally, there is no way Mr. Corzine could have been “stunned” to learn of hundreds of millions of dollars of missing client funds on October 30, 2011, as he was clearly aware of shortfalls in the segregation account on October 27, 2011 (see page 27 of the complaint).

In order to ensure both the integrity of our legal system as well as continued faith in the integrity of U.S. financial markets, as well as the laws and regulations that govern them, were urge you to take prompt action in the aforementioned matters and we look forward seeing justice served in this case.

Sincerely,

Michael G. Grimm (R-NY)
Scott Garrett (R-NJ)
Stephen Fincher (R-TN)
Blaine Luetkemeyer (R-MO)
Bill Huizenga (R-MI)
Tim Huelskamp (R-KS)
Walter Jones (R-NC)
Scott Tipton (R-CO)
Chris Collins  (R-NY)
Bob Gibbs (R-OH)
Stevan Pearce (R-NM)
James Sensenbrenner (R-WI)
Bill Posey (R-FL)
Steve Stivers (R-OH)
Trey Gowdy (R-SC)
Alan Nunnelee (R-MS)
Randy Hultrgen (R-IL)
Kerry Bentivolio (R-MI)