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When Jon Corzine Wasn't Masterminding A High-Level Scam At MF Global, He Was Twirling A Handlebar Mustache With One Hand And Stroking A White Cat With The Other: Litigation Trustee

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Point: Jon Corzine acted in good faith while at the helm of MF Global, accept it, move on, show's over, nothing else to see here, this man is a saint, god why are you so obsessed with him? Counterpoint: Oh, he was a saint alright. The Patron Saint of Plot Hatching and Unauthorized Cash Transfers.

A new litigation trustee yesterday filed an amended complaint in Manhattan bankruptcy court saying that not only did they dramatically change the company’s business plan without addressing weaknesses, but their actions rose to the level of a “scheme.” MF Global’s bankruptcy can be “traced to a scheme” that Corzine, Abelow and Steenkamp “designed and implemented to prop-up the company’s apparent profitability through highly leveraged transactions in foreign debt,” said the new trustee for the failed holding company of the brokerage, Nader Tavakoli. Shortly after the three took control of the company, they put it on a high-risk path that devastated its liquidity, depleted customer funds and ultimately caused its failure, Tavakoli said.

The scheme involved making highly leveraged investments in European sovereign debt using repurchase-to-maturity financing transactions. These allowed the company to inflate earnings by immediately booking income even while it took on future liabilities from the instruments, according to the new complaint. Each such transaction put the company in further peril, and the executives increased the number of transactions near the end of financial quarters to inflate earnings and prop up the company’s stock price, according to the complaint.

Corzine Operated ‘Scheme’ at MF Global, Trustee Alleges [Bloomberg]

Related: Corzine, Lawyers Not Sure Why Regulators Haven’t Gotten Over The Whole MF Global Thing Yet