The CEO of Peregrine Financial was indicted. I already wrote about Peregrine. Peregrine’s CEO, Russell Wasendorf Sr., stole more than $100M of segregated customer money. He lied to regulators and forged bank statements. It’s nearly an exact duplicate of MF Global.
Russell Wasendorf’s son, Russell Wasendorf Jr., is cooperating with regulators. He claims that his father committed the bank fraud on his own, without telling him. That is suspicious, but also possible.
In the USA legal system, you aren’t responsible for the crimes of your relatives. Is that a mistake? If you were responsible for the crimes of your relatives, that encourages more honest behavior. Your relatives would have an incentive to keep you away from crime. If someone is a proven troublemaker, your relatives could formally disown you. Unless he could find another group of people willing to take responsibility for him, a criminal would have a hard time surviving.
The mainstream media spin will be “Finally! A corrupt bank CEO goes to prison.” Wasendorf’s is not “too big to be indicted”. He’s small fry compared to Corzine and Lehman.
With Peregrine, Wasendorf flagrantly and directly committed fraud. With MF Global, the details were more carefully obfuscated, giving Corzine plausible deniability. Corzine encouraged his subordinates to have sloppy accounting. He fired a risk manager who questioned his risky bets in European bonds. Corzine made sure that all his subordinates were spineless yes-men, rather than people who would say “Wait a minute! We shouldn’t take segregated customer money out of the account.”
At the banks I worked at, you couldn’t spend $1 without getting the approval of ten people. It’s hard to imagine that $1.6B of customer money was stolen without Corzine knowing. Corzine was smart enough to make sure that there’s no paper trail or E-Mails, showing he directed the scam. He may have hired subordinates who were smart enough to steal on their own, without explicitly being orderd.
Corzine claims that he’s incompetent. He’s a swell guy who would never intentionally steal customer money. I don’t accept that excuse. If you’re the CEO, you’re responsible for what happens. It makes no difference if you rob customers explicitly and directly, or if you’re so incompetent that you don’t know what’s going on. If you’re so clueless that you can’t hire competent subordinates and keep track of what they’re doing, then you shouldn’t be CEO.
That’s a key principle of the corrupt “justice” system. If a CEO claims his subordinates tricked him or were incompetent, then the CEO didn’t commit a crime. That’s ridiculous. The leader is always is responsible. If the CEO’s subordinates did a bad job, then it’s the CEO’s fault for hiring them and not properly supervising them. That loophole allows insiders to get away with crimes, using the “I’m stupid!” defense.
Even more corrupt, many of MF Global’s executives moved on to high-ranking jobs in other banks. Some of those executives helped funnel customer money to other banks, and then were rewarded with jobs after MF Global imploded.
Peregrine was not “too big to fail” and Wasendorf is not “too big to be indicted”. The fnord is “Wasendorf was convicted. Therefore, all corrupt banksters go to jail. Wasendorf was indicted and not Corzine. Therefore, Corzine is not a criminal.”