Farmers Sue Jon Corzine Over Missing Millions

PHOTO: Jon S. Corzine
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Montana farmers have filed a class action suit against former New Jersey governor Jon Corzine, charging that the failed financial firm run by Corzine stole millions from their accounts to pay off its spiraling debts, and that Corzine's "single-minded obsession" with making MF Global a big player on Wall Street led to the firm's collapse.

MF Global's clients included 38,000 wheat farmers, cattle ranchers and others who "hedged" their crop prices by placing millions in MF Global accounts. Those accounts were supposed to be "segregated and secure," according to the federal suit, meaning MF Global could not draw on those funds.

The lawsuit, filed on behalf of all 38,000 customers, alleges that when MF Global made a series of bad investments -- notably in European debt -- it began "siphoning funds withdrawn from segregated client accounts" to cover its debts.

"This is a suit by the real victims of MF Global," said plaintiff's attorney Mark Baker of the law firm Anderson, Baker & Swanson. "The missing funds were not investments in MF Global, or loans to MF Global, but rather the customer's own money as collateral to guaranty their contracts. They were not to be used by others – let alone their own broker – to speculate on risky and exotic securities."

Corzine was at the helm of the firm when it declared Chapter 11 on October 31 , the eighth-largest bankruptcy filing in U.S. history. Regulators initially thought $600 million in customer funds had gone missing, but later upped their estimate to $1.2 billion. Only 60 percent of customer funds could be found.

The Montana complaint takes square aim at Corzine, alleging that the former governor longed to make MF Global a Wall Street powerhouse through a series of risky investments. The lawsuit says Corzine, a former CEO of Goldman Sachs, had a "single-minded obsession" when he took over in early 2010.

But Corzine was reckless in his zeal, according to plaintiffs' attorneys, instead trading in the risky debt of European countries. MF Global grew not through sound business, alleges the complaint, but "through Corzine's political lobbying and the commingling and looting of customers' segregated accounts."

"Once over $1.2 billion in customer accounts was unaccounted for, the Defendants were quick to bury their heads deep in the sand," the lawsuit claims.

According to the February issue of Vanity Fair, Corzine, who reportedly made over $16 million between 2010 and 2011, was shopping for a chateau in France with his wife two weeks before MF Global filed for bankruptcy.

Testifying before the House Agriculture Committee in December, Corzine said he had no idea where the $1.2 billion in missing customer funds had gone and that investigators are still untangling what happened.

Later in the month, he appeared before the Senate Agriculture Committee to deny any wrongdoing. "I never directed anyone at MF Global to misuse customer funds. I never intended to, and as far as I'm concerned, I never gave instructions that anyone could misconstrue," said Corzine.

Corzine Plaintiff: 'It's Consumed My Life

The lead plaintiff in the Montana suit, Martin Klinker, told ABC News that two of his accounts totaling nearly $600,000 are unaccounted for, leaving him with an uncertain future for his grain and cattle farm. "I have a tremendous amount of uncertainty. It's consumed my life," he said. Klinker runs his farm in Fairfield, Montana, with the help of his wife and four children.

Plaintiffs' attorney Mark Molumphy of the law firm Cotchett, Pitre & McCarthy told ABC News that if the farmers lose their money and crops are affected, consumers will feel it at the grocery store. "There could be less product and higher prices in the long term," said Molumphy.

Plaintiffs cannot sue MF Global while it is under bankruptcy protection, but can sue the company's former executives, including Corzine. The Montana suit names Corzine and other former top MF Global executives, as well as the accounting firm PricewaterhouseCoopers and JPMorgan Chase, the bank that held MF Global's funds. Other lawsuits filed on behalf of MF Global investors have also named Corzine and other members of MF Global's former management team.

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Corzine, a Democrat, served as U.S. senator from New Jersey from 2001 to 2006. He was elected governor of New Jersey in November 2005. He became CEO of MF Global in March 2010 after losing his reelection bid to Chris Christie. Before entering politics he had amassed a fortune as CEO of Goldman Sachs. His personal wealth was estimated at $100 million in 2010.

A spokesperson for Jon Corzine declined to comment. PricewaterhouseCoopers and JPMorgan Chase also declined comment.

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