The MF Global financial trading scandal reached Missoula on Monday when a group of Montana farmers filed a class action lawsuit to recover money they claim was stolen from their personal accounts with the New Jersey firm.
"When Jon Corzine bet the farm on some European sovereign debt, he was betting our farms," Fairfield farmer Marty Kinker said during a news conference outside the Missoula Federal Courthouse.
Kinker is the lead plaintiff in the case against MF Global principals Corzine, Christine A. Serwinski and David Simons, JP Morgan Chase and Co. and PricewaterhouseCoopers LLP. Corzine was a former Democratic governor of New Jersey and U.S. senator.
Kinker and other Montana farmers claim they had their farms' segregated accounts raided of thousands of dollars when the brokerage firm reported $1.2 billion of customer money was missing after it declared bankruptcy last year. The farmers' money was used to guarantee futures contracts for their grains and cattle sales, as well as to lock in prices for fuel, fertilizer and seeds for coming years' production.
In late October, Dutton wheat farmer Tim Johnson saw a news report that MF Global was filing for bankruptcy. "I assumed something bad was happening, but I had no idea they would freeze my personal account," he said.
Johnson had $45,000 in his account at the time. The amounts fluctuated: Six months earlier, he had $180,000 there as payments were moving back and forth.
But those accounts were supposed to be kept separate from funds deposited by people using MF Global to invest in commodities and international finance markets. The class action lawsuit claims MF Global lost huge sums in bad investments on European government bonds, and tried to cover the losses by stealing from the segregated customer accounts.
"The unreported part of this story is the getaway drivers, JP Morgan and Pricewaterhouse," said Matt Edling, an attorney representing the farmers. "They had to have a good idea it was customer funds paying their bills. JP Morgan was just fined 30 million (British) pounds in 2010 for failing to protect segregated funds."
PricewaterhouseCoopers audited MF Global's records and internal controls, while JP Morgan Chase was the firm's primary banker. PricewaterhouseCoopers staff attorney Caroline Noolan said the company would have no comment on the filing because it involved one of their clients. Officials from JP Morgan Chase did not return phone requests for comment on Monday.
Edling said the case was being filed in Missoula because both the farmers and the defendants have connections to Missoula County. There are 38,000 potential members of the plaintiff's class who lost money in MF Global accounts, he said.
"For consumers, this is going to hit home in higher prices at grocery stores," Edling said. "It doesn't appear our clients are going to get their money through the bankruptcy court, so they had to take matters into their own hands."
The defendants have 30 days to respond to the suit.