- The Washington Times - Monday, April 8, 2013

A friend of the president gets invited to great parties, the chance to hobnob with Hollywood celebrities and sometimes, if the friend gets in trouble, he can pull out a “Get out of jail free” card.

There’s little else to explain how Jon S. Corzine, the former Democratic governor of New Jersey, appears to pay no price for “negligent conduct” that cost clients at the Wall Street firm MF Global Holdings nearly $2.1 billion. This comes from new findings by Louis Freeh, the former head of the FBI, who investigated the role of Mr. Corzine in the collapse of the financial firm.

The 124-page audit determined the company collapsed because of risky financial deals that spiraled out of control. “Corzine and his management team failed to strengthen the Company’s weak control environment,” Mr. Freeh writes, “making it almost impossible to properly monitor the liquidity drains on the Company caused by Corzine’s proprietary trading strategy.” This backs the findings of an earlier House Financial Services Committee investigation.

MF Global went belly up in 2011, taking with it billions of dollars belonging to customers, creditors and shareholders. “The company repeatedly transferred funds into and out of segregated accounts,” the House report explains, “amplifying the risk that it would miscalculate account balances for regulatory purposes.” Those who questioned Mr. Corzine were shown the door, including the company’s risk assessment officer, who made the mistake of assessing the company’s risks.

Mr. Corzine and his crew continue to deny responsibility as the lawsuits for breaches of fiduciary duty and negligence are filed. A Corzine spokesman, borrowing a cliche from Sunday afternoon football, calls the Freeh report “Monday morning quarterbacking.”

The Justice Department has been eerily silent about the MF Global case. The administration of George W. Bush created the Corporate Fraud Task Force to punish the guilty, winning nearly 1,300 corporate fraud convictions. Those convicted included more than 200 chief executives, company presidents and chief financial officers. Mr. Corzine has so far escaped criminal scrutiny under the current administration.

It’s not difficult to see why. Mr. Corzine raised $500,000 for the president’s re-election campaign. He was even considered for a presidential appointment before MF Global collapsed. Peter Schweizer, president of the Government Accountability Institute, observed in an op-ed column in this newspaper that MF Global was a client of Attorney General Eric Holder’s former law firm, Covington & Burling, where many liberals go to do good and stay to do well. Lanny Breuer, the former head of the Justice Department’s criminal division, has just left the Justice Department to return to Covington & Burling, where he expects to earn $4 million annually. Covington’s list of clients is studded with the elites of Wall Street players.

In the administration’s defense, the president’s lawyers have been consistent in avoiding prosecuting corporate fraud. Despite the president’s anti-Wall Street rhetoric and the Bush example to lead him, his lawyers at the Justice Department haven’t charged a single high-ranking Wall Street executive for fraud.

Honest investing is always risky, and investments gone bad are not evidence of fraud or criminal activity. But there’s plenty in the case of Mr. Corzine to suggest a special prosecutor could have an interesting deep dive into the work of Mr. Corzine and his team at MF Global.

The Washington Times