The U.S. Senate Agriculture Committee is pressing officials from MF Global Corporation to try to explain what's become of the money it is holding for farmers around the country.
The company went bankrupt because of bad bets on European debt. Farmer Dean Tofteland of Luverne, Minn. told the committee that the company has about $200,000 of his money, and he wants to know what happened to it.
"This money was real money in real banks. It wasn't under somebody's mattress," he said. "Somebody at the company knows where the money's at. We have to ask, if there's a debit there has to be a credit. Where's the credit?"
Brokers are required to keep client money separate from company funds, Tofteland reminded the committee.
"It's like if I bring my pickup truck to the car dealership to get the oil changed and over the weekend they close the doors, the bank comes in and the next day they put my pickup on the lot with the cars that are going to be foreclosed on. You know, my pickup is my pickup," Tofteland said.
Many lawmakers have heard from other farmers, ranchers and small business owners in their states who are missing money that was deposited with the firm. Agricultural businesses use brokerage firms like MF Global to help reduce their risks in an industry vulnerable to swings in oil, corn and other commodity prices.
MF Global executives, including former New Jersey Gov. Jon Corzine, say they don't know what happened to the money and that company records are now in the hands of a trustee overseeing the bankruptcy. An estimated $1.2 billion in client funds are missing.
"I never gave any instruction to anyone at MF Global to misuse customer funds," Corzine said.
Corzine, a former Democratic New Jersey senator and governor, resigned as CEO of the securities firm last month.
Bradley Abelow, the firm's president and chief operating officer, and Henri Steenkamp, the chief financial officer, also tried to distance themselves from any decision to transfer the money at the hearing.
"Funds don't simply disappear. Someone took action, whether legal or illegal, to move that money. And the effect of that decision is being felt across the countryside," said Kansas Sen. Pat Roberts, the committee's top Republican.
All three witnesses said that they don't know where the money is.
Yet their testimony varied in subtle ways. Corzine said he did not direct anyone to misuse the money. Abelow said he does not recall directing anyone to divert the money. Steenkamp said clearly that he did not "authorize, approve or know of any transfers of customer funds" out of their accounts."
Depending on the circumstances, transferring money from customers' accounts could violate securities laws and, in some cases, could amount to a crime. Federal authorities have begun criminal investigations. And regulators are looking into whether the firm broke securities rules.
The three executives say they that they didn't become aware of the shortfall until hours before the firm filed for bankruptcy protection on Oct. 31.
Corzine told lawmakers last week that he never intended to authorize the transfer of funds from customer accounts. If any subordinates moved clients' money in the belief that Corzine had authorized it, "it was a misunderstanding," he said.
Corzine, Steenkamp and Abelow have been sued in class-action complaints on behalf of MF Global shareholders. The lawsuits accuse the executives of making false and misleading statements about MF Global's financial strength and cash balances.
MF Global didn't list the European debt on its balance sheet for all to see. Instead, those holdings were shifted to the company's "off-balance sheet," deep in its financial statements. Some separate filings with regulators excluded the European debt entirely.
(AP reporters Marcy Gordon and Daniel Wagner contributed to this report.)