The millions that Jon Corzine amassed as head of Goldman Sachs have become an alluring target for investors who were crushed by the collapse of MF Global, the brokerage firm he led until earlier this month.
And Corzine isn't the only one who may be financially vulnerable after the eighth-largest bankruptcy in U.S. history. Others include MF Global's other top executives; its auditor, PricewaterhouseCoopers; and some big Wall Street banks.
Even MF Global itself, which can't be sued while in bankruptcy protection, could sue its former executives.
Corzine and other senior executives likely share a liability insurance policy to cover potential lawsuits against them. But experts say potential damages sought could well exceed the limits of their policy.
Corporate bankruptcy is a "litigation nightmare: Everyone ends up suing everyone," said Charles Elson, a professor and director of the Weinberg Center for Corporate Governance at the University of Delaware. "The officers and directors are in for a lot of litigation."
Private litigation has already begun. At least two class-action lawsuits on behalf of MF Global shareholders have been filed against Corzine and three other top executives. They accuse the firm and its top executives of making false and misleading statements about MF Global's financial strength, internal controls and cash balances.
MF Global filed for bankruptcy protection on Oct. 31 after a disastrous bet on European government debt. In just a week, stock investors lost about $585 million, the shareholders say.
More than $600 million in clients' money is still missing. Regulators say MF Global moved the money out of client accounts within days as the firm's cash dried up.
No one at MF Global has been charged with a crime or civil violation. But regulators and the FBI and other criminal investigators are investigating MF Global's failure, and Corzine has hired a prominent white-collar defense attorney.
A public relations firm hired by Corzine and a spokeswoman for MF Global declined to comment Monday. Corzine's lawyer didn't immediately return a call.
It isn't clear just how much money Corzine is worth. He spent roughly $100 million of his fortune to win a U.S. Senate seat and the New Jersey governorship. In 2005, the last full year that he was a U.S. senator, he was estimated to be worth between $125 million and $175 million.
Corzine's disclosure filings as governor, through 2009, provide less detail on his finances. They do show he held interests in real estate partnerships, investment companies, hedge funds and private equity funds.
After the MF Global bankruptcy, Corzine declined to take his $12 million severance pay.
Legal experts say Corzine could be held personally liable for misrepresenting to investors the risks that the firm had taken.
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.
Under a 2002 anti-corporate fraud law _ which Corzine co-wrote as a U.S. senator _ CEOs of public companies must personally certify the accuracy of their company's financial statements.
If client money was used by the firm for its own purposes, Corzine could be held responsible, said Thomas Ajamie, an attorney who specializes in financial fraud cases.
"That would be the house gambling with customers' money," Ajamie said.
Other top MF Global executives also could face legal jeopardy, experts say. And members of the board of directors could be accused of failing to properly oversee Corzine's trading strategy and the firm's risk management.
PricewaterhouseCoopers, MF Global's auditors, could be targeted, too. So could the Wall Street banks that put up money for floating the firm's own bonds.
With MF Global in bankruptcy, new potential litigants could step forward, in addition to civil and criminal authorities and shareholders. The trustee the bankruptcy court appointed will conduct an investigation and could sue top executives on behalf of the company to recover money for creditors.
"Anyone who has a deep pocket gets sucked in," Elson said.
Major companies typically provide liability insurance for top executives and their directors. The insurance covers the legal costs in case they're sued by shareholders or others and the damages they might have to pay.
The insurance provides a single pot of money for executives and board members, usually in the hundreds of millions of dollars. Companies offer the insurance as a perk to recruit executive talent, experts say. The insurance kicks in if executives or directors are accused of breaches of duty and "wrongful acts" that stop short of fraud, such as misstatements to investors.
Experts say the damages or penalties that could be sought in MF Global's case could far outstrip executives' insurance coverage. That's because multiple parties could sue each executive or director for tens of millions. The payouts could exceed each official's share of the coverage.
Craig Welin, a lawyer at Frandzel Robins Bloom & Csato, which specializes in bankruptcy and financial litigation, said he thinks Corzine could be tied up in litigation for five to 10 years.
"They'll be looking under every rock," Welin said. "And if that rock has deep pockets, they'll look even closer."
AP Business Writer Bernard Condon contributed to this report from New York.