Corzine Wants Case Dismissed, Gupta Seeks Leniency: This Week in Corporate Crime
by Aaron Task, Daily Ticker
Four years after Lehman's bankruptcy, most Americans are still waiting for the "perp walks."
Despite the populist (and partisan) appeal, former Goldman CEO and New Jersey Governor Jon Corzine seems likely to escape prosecution for the demise of MF Global, which collapsed nearly one year ago.
"After 10 months of stitching together evidence on the firm's demise, criminal investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear," The New York Times reported in August.
This week, Corzine's lawyers are seeking to have a civil case dismissed. A group of investors, including the Virginia Retirement System, claim Corzine, MF Global and its banks -- including Goldman, JPMorgan and Citigroup -- mislead investors about the risks MF Global was taking with its leveraged bets on European debt.
Corzine's lawyers claim the case "makes no sense" because Corzine bought 50,000 shares of MF Global two months before the collapse, The WSJ reports. Furthermore, Corzine's lawyers say the firm collapsed because of "unsuccessful business strategies," not fraud.
Meanwhile, former Goldman Sachs, Procter & Gamble and American Airlines board member Rajat Gupta is scheduled to be sentenced for insider trading today.
Gupta, who was found guilty of three counts of securities fraud and one count of conspiracy, faces a maximum sentence of 25 years, Reuters reports. Federal prosecutors are seeking 8 to 10 years but Gupta's powerful friends, including Bill Gates and Kofi Annan, are asking the judge to be lenient, citing his charitable work.
Of course, Bernie Madoff did a lot for charity too (before destroying several) and it's not hard to be charitable when you've amassed immense wealth. But Gupta was not Robin Hood and doing "good deeds" should in no way obscure the crimes committed.
Here's hoping U.S. District Judge Jed Rakoff - who has a history of being tough on white collar criminals and Wall Street generally - will do the "right" thing and reject the populist (and popular) notion that the law doesn't apply to the 1%.
Update: Gupta was sentenced to 24 months in prison and ordered to pay $5 million in fines.
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