Poster Boy for Greed

Former New Jersey Governor Jon Corzine is a bad, bad boy.  He always was a bad boy.  When Corzine was running for governor, radio broadcaster Bob Grant tried to tell whoever was listening that this guy is as corrupt as they come.  Still, New Jerseyans being what they are, they first elected him as a U.S. Senator, and then governor.

Born in Illinois, Corzine enrolled in the University of Chicago Booth School of Business in 1970 and got his MBA in 1973.  His first business experience at the University.  He then moved to BancOhio National Bank (a regional bank in that was acquired in 1984 by National City Bank).  

In 1975, Corzine moved his family to New Jersey and was hired as a bond trader for Goldman Sachs. Over the years, he worked his way up to Chairman and CEO of the company in 1994 and converted the investment firm from a private partnership to a publicly traded corporation. Corzine’s predecessor had led Goldman to its first money-losing year in its 129-year history and to its near collapse as a firm.  Corzine also chaired a presidential commission for Bill Clinton and served on the U.S. Treasury Department’s borrowing committee.   As a Goldman Sachs senior partner, he helped develop a rescue package for the hedge fund Long Term Capital Management when the leveraged fund's collapse in the fall of 1998 threatened contagion across the US financial system.   

According to U.S. News & World Report, Corzine did not get along with co-CEO Henry Paulson, who came from the other major area of the bank, investment banking.  When Corzine decided to help the bailout, Paulson seized control of the firm.   As co-chairman of the firm, he oversaw its expansion into Asia.  When Goldman Sachs went public after Corzine's departure, Corzine made $400 million. Did you read that, Occupy Wall Street?  Probably not, because Corzine is a Democrat and you turn a blind eye to Democrat greed.

Corzine was elected to the Senate in 2000, where he co-authored the Sarbanes-Oxley Act. also known as the 'Public Company Accounting Reform and Investor Protection Act' (in the Senate) and 'Corporate and Auditing Accountability and Responsibility Act' (in the House) which set new or enhanced standards for all U.S. public company boards, management and public accounting firms.  In the aftermath of Enron, he co-sponsored (with Barbara Boxer) legislation in 2002 that reformed the 401(k) to minimize the risk of investment portfolios, and not incidentally, lowered their value. The plan was opposed by George W. Bush and Congress.   Restrictions on retirement account allocations were in direct opposition to the contemporaneous movement towards self-directed individual retirement accounts for social security.

In the spring of 1999, when Corzine was running for the Senate, he met Carla Katz, the then president of Local 1034 of the Communications Workers of America, which represents the largest number of state workers in New Jersey. Corzine offered her a job on his Senate campaign, but she declined the offer.  For more than two years Corzine was romantically involved with Katz. She lived with him at his Hoboken apartment from April 2002 until August 2004.

After Corzine's breakup with Katz, their lawyers negotiated a financial payout in November 2004. According to press accounts, the settlement for Katz exceeded $6 million, including cash (in part used to buy her $1.1 million condominium in Hoboken), a college trust fund to educate her children, a 2005 Volvo SUV, and Corzine forgave a $470,000 loan that he had made to Katz in 2002 so that she could buy out her ex-husband's share of their home.  Corzine later admitted that he had also given $15,000 to Carla Katz's brother-in-law, Rocco Riccio, a former state employee who had resigned, after being accused of examining income tax returns for political purposes. At the time, Katz was president of the CWA Local 1034, which bargains on behalf of many state employees.

In the summer of 2005, when Corzine was running for governor, news first emerged of his relationship with Katz and the money she had received. Corzine was elected governor despite the scandal.  In the fall of 2006, during an impasse in contract negotiations between the Corzine administration and the state’s seven major state employee unions (including the CWA), Katz contacted the governor by phone and e-mail to lobby for a renewal of the negotiations. Their relationship and the financial settlement Katz received after their breakup led to criticism of potential conflicts of interest in labor negotiations while Corzine was governor.  A state ethics panel, acting on a complaint from Steve Lonegan, ruled in May 2007 that Katz's contact with Corzine during negotiations did not violate the governor's code of conduct.  

Separately, N.J. Republican State Committee Chairman Chairman Tom Wilson filed a lawsuit to release all e-mail correspondence between Corzine and Katz during the contract negotiations. On May 30, 2008, N.J. Superior Court Judge Paul Innes ruled that at least 745 pages of e-mail records should be made public, but Corzine's lawyers immediately appealed the decision.

Corzine won his case on appeal, and on March 18, 2009, the court ruled that it would not hear arguments in the case, effectively ending the legal battle to make his e-mails with Katz public. Corzine spent approximately $127,000 of taxpayer funds to keep the e-mails secret. Despite these efforts, on August 1, 2010, The Star-Ledger published 123 of the Corzine-Katz e-mails, revealing the extent of their personal contact during negotiations over a new state workers contract in early 2007.

After he lost the gubernatorial election, Corzine was appointed CEO and Chairman of MF Global,a multinational futures broker and bond dealer, in March 2010. MF Global's stock price declined two-thirds in the final week of October  and its credit rating was reduced, making its debt high-yield debt following huge quarterly losses.   On October 31, trading was halted on shares of MF Global prior to the market opening, and soon thereafter,  MF Global announced that it had declared Chapter 11 bankruptcy. Shortly afterwards, federal regulators began an investigation into hundreds of millions of dollars in missing customer funds.   Corzine resigned as CEO on today, after having retained the services of prominent white-collar attorney defense attorney Andrew J. Levander.

According to Fox News:

“Corzine’s exit comes just four days after New York-based MF Global collapsed under pressure from over $6 billion in risky bets on European sovereign debt.  Its Chapter 11 filing marked the eighth-largest bankruptcy in U.S. history.  Since its implosion, a string of negative headlines have emerged, including more than $600 million in missing client funds and questions about whether MF Global management may have misled investors about the company’s health.

“’This was a difficult decision, but one that I believe is best for the firm and its stakeholders,’ Corzine, who became CEO in 2010, said in a statement. ‘I feel great sadness for what has transpired at MF Global and the impact it has had on the firm's clients, employees and many others.’

“In a sign he’s worried about potential prosecution, Corzine has hired Dechert’s Andrew Levander, a well-known white-collar defense lawyer. In the past, Levander served as legal counsel for ex-Merrill Lynch CEO John Thain and outside directors at Lehman Brothers. He has also advised Goldman, Morgan Stanley and JPMorgan Chase (JPM: 33.69, -0.69, -2.01%).

“Legal experts say Corzine could face criminal charges if evidence emerges that he intentionally misused client funds -- which are supposed to be segregated -- for MF Global’s needs such as collateral calls from counterparties and customer withdrawals. Likewise, Corzine could be under pressure if regulators believe he intentionally misled investors about the financial health of the company in the days leading up to its bankruptcy.

“However, criminal charges are notoriously difficult to make stick against Wall Street officials because executives’ intent must be proved in addition to any wrongdoing. It's been three years since the biggest financial crisis since the Great Depression, and no major executive on Wall Street has faced criminal charges.

“’I intend to continue to assist the Company and its Board in their efforts to respond to regulatory inquiries and issues related to the disposition of the firm's assets,’ Corzine said.

“In a separate statement, MF Global said Corzine has confirmed he won’t seek severance payments in connection with his resignation. The company also said lead director Edward Goldberg and Bradley Abelow, its president and chief operating officer, will stay on in their current positions.

“Meanwhile, a new analysis from The Wall Street Journal reveals MF Global for the past two years disguised its debt levels to investors by temporarily cutting borrowing before reporting earnings each quarter.  The practice, known as ‘window dressing,’ is not considered illegal but appeared to have masked investors’ ability to gauge the amount of leverage on the company’s balance sheet.

“’Corzine also lobbied against a proposal from the Commodity Futures Trading Commission that would have more tightly restricted how futures-trading firms can invest funds in customers’ trading accounts, the Journal reported.”

So, Occupy Wall Street, here’s an economic villain for you.  What are you going to do about?  Are you going to behead him in Zoocotti Park?  Are you going to “occupy” his Hoboken apartment?  Camp out in front of his door?  Urinate on his sidewalk, drum him out of the ranks (and out of his mind, like everyone else in Lower Manhattan) of Liberaldom?

No.  We didn’t think so.