The Bond King’s Bad Bet

When a half-billion-dollar investment goes sideways, sometimes the cure is worse than the disease. Meet JC Flowers and John Corzine—two Goldman Sachs alumni whose friendship survived boardroom betrayals, political scandals, and a spectacular fall from grace, but couldn't survive their own hubris.

After Refco's spectacular 6-day collapse wiped out $3 billion in shareholder value, private equity kingpin JC Flowers saw opportunity in the wreckage. Years later, he'd recruit his old Goldman buddy John Corzine—fresh off losing the New Jersey governor's race—to transform the sleepy commodity broker MF Global into an investment banking powerhouse.

What could go wrong when you hand a firm 1/75th the size of Goldman Sachs to a man who once threw up in a garbage can after being ousted from Wall Street's most prestigious bank? Everything, as it turns out.

From Flowers' billion-dollar government-subsidized wins to Corzine's catastrophic European debt gamble, this is the story of two men who confused a rowboat for a cruise ship and tried to ride out a financial storm. Featuring illegal customer fund transfers, a Global Treasurer nicknamed "the grave digger," and the fastest way to lose other people's money while collecting your own bonuses.

Because some people never learn the first time—and some Wall Street networks run deeper than friendship.

• Sources

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