Monday, August 24, 2009

It's His Wall Street Way: Jon Corzine Fought for Tax Breaks for Enron, But Raises Taxes on New Jerseyans

What If You Could Make Billions in Debt Disappear...Including $61 Million from the New Jersey Pension Fund?

PARSIPPANY, NJ - Jon Corzine frequently touts his Wall Street credentials, but Wall Street is just where he learned to manipulate the rules to make money for himself, regardless of the consequences to average taxpayers. Monmouth County Sheriff Kim Guadagno today calls on Governor Corzine to account for his role in creating, protecting and fighting for Enron's off-shore tax havens and enabling them to successfully scam the government and New Jerseyans. Sheriff Guadagno asks Governor Corzine to come clean and provide answers to New Jerseyans about his real role in the Enron debacle.

Corzine Invents Financial Loophole to Mask Corporate Debt. When Governor Corzine was Chief Executive Officer of Goldman Sachs, he spearheaded the invention of a new security-one meant to allow his client, Enron, to parade massive debt as equity. Monthly Income Preferred Securities (MIPS) were "designed in such a way that it could be called debt or equity, as needed. For the tax man, it resembled a loan, so that interest payments could be deducted from taxable income. For shareholders and rating agencies, who look askance at overleveraged companies, it resembled equity" (John McKinnon and Greg Hitt, "Double Play: How Treasury Lost In Battle To Quash A Dubious Security," Wall Street Journal, 02/04/02). This loophole, which allowed billions in debt to be hidden, eventually led to Enron's implosion and resulted in lost pensions for hard-working Americans, including $61 million from the New Jersey's own pension fund.

As New Jersey taxpayers reeled and were strapped with the burden of recouping the fund's losses, Corzine's multi-billion dollar investment firm raked in $69 million in fees from their business dealings with Enron.

Corzine Lobbies President Clinton to Preserve Tax Haven for Enron. New Jerseyans know that responsible stewardship means little to greedy Wall Street executives like Jon Corzine. This point was poignantly illustrated when the Clinton Administration attempted to rein in Goldman Sachs' questionable accounting practices for Enron before it was too late: "To top officials at the Clinton Treasury Department, the so-called Monthly Income Preferred Shares, or MIPS, looked like a charade - a way for companies to mask the size of their debt while cutting their federal tax bill" (John McKinnon and Greg Hitt, "Double Play: How Treasury Lost In Battle To Quash A Dubious Security," Wall Street Journal, 02/04/02). The Clinton Administration's U.S. Treasury took aim at the risky and manipulative tax haven, but their efforts to stymie Enron's foreseeable collapse were torpedoed by an aggressive lobbying campaign led by Jon Corzine, who went as far as to lobby President Bill Clinton with a personal letter of appeal: "One letter, signed by Jon Corizne, then chief executive officer of Goldman Sachs, and 34 others portrays the Treasury as attempting to draw "completely arbitrary lines" between debt and equity" (John McKinnon and Greg Hitt, "Double Play: How Treasury Lost In Battle To Quash A Dubious Security," Wall Street Journal, 02/04/02).

Enron Collapses. 5 years later, after Jon Corzine successfully lobbied to enable Enron's questionable accounting practices, Enron collapsed, New Jerseyans saw their pensions evaporate and Jon Corzine walked away with a bonus.

Not surprisingly, Jon Corzine is unwilling to expose his dubious history aiding some of Wall Street's largest firms to wiggle out of taxes, while using his time as New Jersey's Governor to heap taxes on hard-working citizens and small businesses.

Sheriff Guadagno Demands Answers. Sheriff Kim Guadagno said, "Given Jon Corzine's past history of manipulating debt with disastrous consequences, New Jersey cannot afford him cavalierly rolling the dice with our money in the same way he rolled the dice with the money of millions of investors, including New Jersey's pension fund. New Jerseyans work hard for their money and they deserve a Governor who will look out for their best interests-rather than the best interests of his financial investments and his political party.

"As Goldman Sachs' CEO, Jon Corzine made a practice of hiding hundreds of billions for large corporations in off-shore tax havens, so it's little surprise that he seems unconcerned about New Jersey's looming $10 billion deficit. Only an out of touch Wall Street executive would trivialize the crushing weight of reconciling these massive debts on New Jersey's middle class families. I call upon Governor Corzine to finally shed light on his full participation in the hard-press lobby that allowed tax havens for corporations like Enron to evade the system, and release all records related to his lobbying of the Clinton Administration and Congress that allowed these tax havens to thrive," continued Sheriff Guadagno.

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