Yesterday (July 26), word came out that explains, in part, why the US Department of Justice never prosecuted Jon S. Corzine or anyone else at MF Global Holdings. The Attorney General, and two of his most senior associates, all had legal ties to MF Global, through the law firms that employed them. That alone should force them to yield to a special prosecutor. But it is part of a much larger problem. MF Global is not the only bad actor on Wall Street.
MF Global Conflicts of Interest
Jon Corzine at the Teaneck Street Fair in 2006, while he was Governor of New Jersey. Photo: Leslie Gottlieb, CC BY 2.0 Generic License.
Before any law firm takes a new case, someone in that firm looks up all the other cases that the partners and associates are working on. Law firms do not let their associates represent opposite sides of a case. Every bar association in the land forbids that.
Someone should have run such a “conflict study” on MF Global for the DOJ. Peter Schweizer (The Washington Times), author of Throw Them All Out, did just that. Here is what he found:
The law firm of Covington and Burling represented MF Global before it went bankrupt. Eric Holder and Lanny Breuer were associates at that firm before they became Attorney General and Assistant Attorney General, respectively. The Government Accountability Office discovered that fact.
After MF Global went bankrupt, Trustee Louis J. Freeh retained the firm of Morrison and Foster as general bankruptcy counsel. Tony West was an associate there before he became Associate Attorney General. (Tony West handled the government’s response to the comprehensive anti-Obamacare lawsuit Purpura v. Sebelius.)
Louis Freeh has his own conflict. When he was general counsel of MBNA Bank, he once retained Eric Holder to do some legal work for MBNA. (If you don’t recognize MBNA, this might help: if you live on the East Coast, and have a credit card in your wallet, chances are that MBNA issued it.) Freeh also testified to Holder’s character at Holder’s confirmation hearing in the Senate.
Jon S. Corzine, the last head of MF Global, was a “bundler” for putative President Barack H. Obama. That was enough to prompt sixty-five Members of the House to demand a special prosecutor in the case. Schweizer’s findings should force Holder to appoint a special prosecutor, by every rule that every lawyer knows about conflicts of interest.
MF Global Makes Enemies Right and Left
As Breitbart.com reported yesterday, MF Global now has political enemies on the right and the left. Newsweekasked in May why the DOJ never prosecuted MF Global, or anyone else on Wall Street. The DOJ today prosecutes many things, but they prosecute financial fraud far less often than happened under the Bush administration. Richard Eskow at The Huffington Post noticed the same thing two weeks ago. He asked in effect, What is Eric Holder doing, or waiting for?
She gave an interview on November 30, 2011. (See the video embed.) For half an hour she said that no one would ever touch Jon S. Corzine. She might not have had the specific findings that Schweizer reported yesterday, but she didn’t need them. For her, Jon S. Corzine’s role in raising money for Obama was enough.
But she also said from the start that not only MF Global but the entire Wall Street system is hopelessly corrupt. (See also here and here.) In that November interview, she even said that civil war might break out over not only the failure but the brazen and absolute refusal to prosecute the fraud with which, she says, Wall Street is rife.