* Justice Department may be asked to step aside
* NY congressman cites ex-CEO Corzine's political ties
* Estimated $1.6 billion customer money still missing
By Jonathan Stempel, Nick Brown and Aruna Viswanatha
May 3 A U.S. congressman is pressing for the
appointment of an independent counsel to take over a federal
criminal probe into the collapse of the MF Global Holdings Ltd
Michael Grimm, a first-term Republican congressman from New
York City and member of the House Financial Services Committee,
has circulated to colleagues a proposed letter that would ask
U.S. Attorney General Eric Holder to step aside.
Grimm hopes to gain broad bipartisan support before sending
the letter to Holder next week, a spokeswoman for the
congressman said on Thursday.
The move comes roughly six months after MF Global filed for
bankruptcy, and its customers learned that money in their
accounts had disappeared. A trustee for the company's main
brokerage unit estimates that the shortfall is $1.6 billion.
MF Global had been run by Jon Corzine, a former Democratic
U.S. senator and governor of New Jersey.
Grimm's letter, earlier reported by Fox Business News,
suggests that Corzine's ties to Washington, including with
"highly placed individuals" in the government who are "very
close" to the U.S. Department of Justice probe, warrants the
naming of an independent counsel.
Federal law authorizes such an appointment when a Justice
Department probe "may result in a personal, financial or
political conflict of interest," the letter said. "Clearly the
case of MF Global and Mr. Corzine falls under this section."
While there is "no direct evidence" that anyone is getting
special treatment, "perception matters," the letter added.
Randall Samborn, a Justice Department spokesman, declined to
comment. Andrew Levander, a lawyer for Corzine, also declined to
Rep. Randy Neugebauer, a Texas Republican who chairs the
House Financial Services subcommittee investigating MF Global's
collapse, has not signed Grimm's proposed letter, a person
familiar with the matter said on Thursday.
Before joining the House of Representatives, Grimm had been
an FBI agent for 11 years.
Congress has heard testimony from Corzine and other
officials, including from the company's main bank, JPMorgan
Chase & Co, about MF Global's last days prior to its
Oct. 31 bankruptcy.
Corzine testified that he did not order anyone to withdraw
money from customer accounts, and did not know where the missing
MF Global officials including Corzine have been hit with
many lawsuits by former customers and shareholders.
Among them is Sapere Wealth Management LLC, a commodities
customer that is appealing a bankruptcy court ruling allowing MF
Global officials to tap insurance to cover their legal bills.
Sapere prefers that insurance money be reserved for customers.
"After more than six months, there is no indication of any
meaningful government investigation," Sapere's lawyer, John
Witmeyer, said in an interview. "Whether or not the law requires
an independent investigator, it would certainly be prudent to
The cases are In re: MF Global Holdings Ltd et al, U.S.
Bankruptcy Court, Southern District of New York, No. 11-15059;
and In re: MF Global Inc in the same court, No. 11-02790.