Americans Are Still Waiting for the "Perp Walks"

Ahhh-- soft-serve.

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.

What, Me Accountable?

Fraud -- What Fraud? Besides, There's Only $1.6 Billion Missing

There's seldom a criminal charge in sight for these runaway rogue traders, it seems.

I can feel a smirk spreading across my face.

By Jonathan Stempel

* Ex-MF Global CEO said had no motive to commit fraud

* US investigators also probe future brokerage's collapseNEW YORK, Oct 22 (Reuters) - Jon Corzine's lawyers say allegations that he fraudulently ran MF Global Holdings Ltd make "no sense" and that a lawsuit seeking to hold him and others responsible for the futures brokerage's bankruptcy must be thrown out.

Corzine, former colleagues and several banks, including JPMorgan Chase & Co and Goldman Sachs Group Inc, filed papers on Friday night to dismiss investor litigation over MF Global's collapse. The company's Oct. 31, 2011, bankruptcy was Wall Street's biggest meltdown since 2008.

Plaintiffs led by the Virginia Retirement System and the province of Alberta, Canada, have accused MF Global in the U.S. District Court in Manhattan of inflating its ability to manage risk, obscuring risks from a big bet on European sovereign debt and improperly accounting for deferred tax assets.But lawyers for Corzine, MF Global's former chairman and chief executive officer, said there was no securities fraud. They said the allegations merely suggested that Corzine mismanaged the company, was too optimistic, or failed to predict a liquidity squeeze prompted in part by credit rating downgrades.

Corzine's lawyers also said the former New Jersey governor's ownership of 441,960 MF Global shares, including some bought in August 2011 when the exposure to European sovereign debt had peaked, showed that he had no motive to commit securities fraud.

"Plaintiffs have not alleged any facts from which it could be inferred that Mr. Corzine knew prior to October 30, 2011 that MF Global would not be able to survive," Corzine's lawyers wrote. "Plaintiffs' theory that Mr. Corzine had fraudulent intent or participated in a fraud makes no sense."

The bank defendants, in a separate court filing, contended that MF Global's business strategy and risks were fully disclosed in public filings.

Salvatore Graziano and Jonathan Plasse, lawyers who represent the lead plaintiffs, did not immediately respond to requests for comment.

The Virginia Retirement System said it had managed about $53.1 billion of pension fund and other assets as of June 30. Alberta, through its Alberta Investment Management Corp unit, said it oversaw about C$70 billion (US$70.4 billion) of pension fund and government assets.

Their lawsuit, which seeks class-action status, covers investors in MF Global common stock, convertible bonds and senior notes between May 20, 2010, and Nov. 21, 2011.

Among the other defendants are former MF Global Chief Financial Officers J. Randy MacDonald and Henri Steenkamp, seven former independent directors, and units of Bank of America Corp , Citigroup Inc, Deutsche Bank AG and Royal Bank of Scotland Group Plc.

The U.S. Department of Justice and Commodity Futures Trading Commission are also investigating MF Global's collapse, which has left an estimated $1.6 billion of customer funds missing.
Criminal charges stemming from the collapse are unlikely, and civil cases are the more likely outcome, people familiar with the matter have said.

The case is DeAngelis et al v. Corzine et al, U.S. District Court, Southern District of New York, No. 11-07866.