US Files Civil Charges Against Jon Corzine

The United States has filed civil charges against Jon Corzine over the 2011 collapse of MF Global. The charges were announced on Thursday as regulators settled charges against the former futures brokerage.

Along with Corzine, former assistant treasurer Edith O’Brien was also charged in connection with alleged misuse of customer funds. The charges were filed by the Commodity Futures Trading Commission (CFTC).

MF Global has agreed to settle all charges against it and pay a $100 million penalty. The brokerage will also pay all the funds it still owes to its former commodity customers.

The lawsuit against Corzine alleges that he made risky bets with MF Global in European sovereign debt, along with other investments, while he attempted to transform the company into a major Wall Street investment bank.

But the investments instead strained the brokerage, leaving it in “desperate need of funding to survive.” Cash sources dried up in October 2011, which is when the broker allegedly began to tap into customers’ funds to supports its operations. The move is illegal, as customers’ funds should be kept segregated. The lawsuit charges:

“Corzine bears responsibility for MF Global’s unlawful acts. He held and exercised direct or indirect control over MF Global … and either did not act in good faith or knowingly induced these violations.”

The civil charges against Jon Corzine will seek full restitution and penalties against the former co-chairman of Goldman Sachs and onetime New Jersey governor, as well as O’Brien.

Jon Corzine’s attorney, Andrew Levander, responded late Thursday to the civil charges, saying that the lawsuit has no merit. He added:

“This is an unprecedented lawsuit based on meritless allegations that Mr. Corzine failed to supervise and experienced back-office professional who was located in a different city and who did not report to Mr. Corzine or even to anyone who reported to Mr. Corzine.”

While civil charges against Jon Corzine continue in court, the MF Global trustee for liquidation announced that it has distributed $4.981 billion to the firm’s former customers.