Where Did The Money Go?

Hundreds of millions, perhaps as much as billion dollars are missing -- and that's just from MF Global. Where did the money go, ? It's a fair question to ask. Inquiring minds want to know.

The weird thing is the report that stated that they thought they found the money, but now they're questioning it. Come on. How do you lose that kind of money? It's not as if you had a $100K engagement ring that you took off and put on the sink of a public bathroom while you washed your hands and then forgot to put it back on. It's not as if you had a diamond bracelet with a clasp that broke. There's an explanation. As I said, inquiring minds want to know. Too bad that never seemed to be a priority for those who write and those who are supposed to enforce the law.

About 15 years ago, a friend was covering the ongoing story about the principals of a small bank in northern Connecticut that went under. The money that customer lost couldn't be traced, she said. I told her that's impossible. They have records, I explained. There's a paper trail. No, there isn't, she countered. The money was transferred to the wives of the principals, she elaborated.

I still didn't understand why the money couldn't be clawed back (a term, by the way, that was rarely used, if ever, in those days). Of course, it was spent, but cars can be repossessed, jewelry can be resold, etc. Isn't receiving stolen goods a crime? Weren't their wives also accessories after the fact?

Do such laws still exist? I can't help but wonder in the aftermath of the Madoff Ponzi scheme, which had so many victims and so many enablers. There is a huge difference between the Connecticut bank and the Madoff investors. The sales people of the feeder funds had to convince the investors to put their money into the funds. When I worked for Fairfield Greenwich Group, I saw the marketing material they used. It was a spreadsheet I had to update based on the calculations of the N.A.V. [net asset value] calculated by Corina Noel Piedrahita that included the cash infusions, value of the investments and fees. The N.A.V. sheet compared changes weekly, monthly, annually and since inception and, yes, it was impressive. The rising N.A.V., as everyone knows, was slow and steady rather than volatile but that, too, was one of the selling points: that people could sleep at night.

I never expected the investors to get all their money. In some ways, this was the Wall Street version of a class action suit. The major victory sounds great because the money reported is in the millions, but the victims get bubkes. What is frustrating for so many people -- and not just the victims -- is the fact that the enablers have not been charged with criminal activity. No wonder Jon Corzine, huge ego and reckless nature notwithstanding, had no incentive to exercise any fiduciary responsibility. What was the worst he thought could happen? He would lose other people's money.