WASHINGTON - A bankruptcy trustee's proposal to give bonuses to MF Global executives to find money it owes farmers around the country is "unethical" and "sick," victims said Monday.
Executives who told congressional committees that they didn't know what happened to $1.6 billion in missing funds are "now basically being paid to cover their own tracks," said Minnesota farmer Dean Tofteland.
Tofteland, who grows wheat and corn and raises cattle in Luverne, said he is still out $70,000 from funds that MF Global wasn't supposed to touch. Nationally, most farmers have collected 72 cents of every missing dollar. But they want to be made whole.
That's why Tofteland hopes the judge in the eighth-largest bankruptcy in U.S. history rejects trustee Louis Freeh's plan to give bonuses to Chief Operating Officer Bradley Abelow, General Counsel Laurie Ferber and Chief Financial Officer Henri Steenkamp if they can unravel the secret of the missing funds.
Freeh's plan envisions no such payments to Jon Corzine, the former Democratic U.S. senator and New Jersey governor who ran MF Global at the time it went under.
"When I read about the plan, I couldn't believe it," said Tofteland, who testified in December to the Senate Agriculture Committee about hundreds of thousands of dollars of his money that MF Global may have transferred illegally as the company collapsed. "We've got a mess here. It's not about money; it's about a system of justice and rules. Until all the customers are made whole, there should be no bonuses.
Keith Sorenson of Sorensen Yaggie Commodity Consultants in Nisswa said dozens of Minnesota farmers he advises still have not gotten all of their money back. Those customers now face issues with how to report those losses on their taxes. As the bankruptcy bureaucracy keeps farmers in limbo, Sorensen called the bonus proposal "sick."
One reason for the visceral backlash is that two of the three people slated to receive bonuses -- Abelow and Steenkamp -- swore to the Senate Agriculture Committee in December that they did not know where missing farmer funds went.
MF Global was used to clear the options and futures trades farmers use to hedge financial risks on crops and livestock. The money in those accounts was supposed to be separated from the rest of the company's funds.
Minnesota Sen. Amy Klobuchar, a Democrat who sits on the Agriculture Committee, sent a letter to Freeh on Friday condemning the bonus strategy.
Offering bonuses to the people in charge when MF Global went bankrupt "sends the wrong message to customers already skeptical of the bankruptcy process," Klobuchar wrote.
Adding to the controversy are letters farmers are receiving from so-called "vulture funds." The letters, said Sorensen, offer to pay farmers 85 to 90 percent of what a farmer is still owed in exchange for the rights to collect whatever MF Global eventually pays.
"If MF Global makes everyone whole, the vultures make money," Sorensen said.
For Tofteland, vulture-fund offers amount to one more outrage in a string that dates back to October 2011, when MF Global went under and couldn't find his money. Tofteland believes the vulture funds are tied to big banks, which in his opinion started the whole mess.
"I got a couple of letters," he said. "I just threw them away."
Jim Spencer • 202-408-2752