Peregrine Financial Group Inc. Chairman Russell Wasendorf Sr. has two universal life insurance policies providing him with at least $6.6 million in coverage, his court-appointed receiver said in a court filing.
Chicago lawyer Michael Eidelman, who was appointed in the U.S. Commodity Futures Trading Commission lawsuit against Wasendorf and his firm, today asked a federal judge for permission to cash in one policy for its nearly $1.3 million surrender value and to quit paying premiums on the other.
That request came amid a broader proposal by Eidelman for establishing specific procedures for liquidating Wasendorf’s holdings, including a jet plane.
The CFTC accused Wasendorf and Peregrine on July 10 of misappropriating more than $200 million in customer funds. The Cedar Falls, Iowa-based firm filed for Chapter 7 bankruptcy protection the same day.
A day earlier, Wasendorf tried to kill himself outside the company’s headquarters after the National Futures Association, an industry self-regulator, announced the money was missing from the firm’s bank accounts.
Among Wasendorf’s holdings were the policies, a Hawker Beechcraft Inc. model 400A jet, a restaurant, a publishing company and a wine collection, according to today’s filing.
“The receiver currently believes that many of the assets were procured with funds embezzled from Peregrine,” Eidelman and attorney Randall Lending told U.S. District Judge Rebecca Pallmeyer in the submission.
Eidelman seeks Pallmeyer’s permission to abandon Wasendorf property worth less than $50,000 if the cost of maintaining it is too great without giving notice to the court or creditors. He proposed a limited notice procedure for disposing of property worth as much as $250,000 for the same reason. Disposition of assets worth more than that would be subject to court approval, they said.
The lawyers have asked for a hearing on Aug. 8.
While the older of the two life insurance policies, issued in 2004 with a face amount of $4.5 million, has a surrender value, the $2.16 million policy procured in 2011 does not, Eidelman and Lending said. Should Wasendorf die before that policy’s expected lapse in February 2014, the death benefit should be paid to the receivership, he said.
They have also told the court they wish to abandon the Beechcraft jet, in which Wasendorf had no equity, to its secured creditor or a co-obligor identified as Family Air LLC.
The regulatory case is U.S. Commodity Futures Trading Commission v. Peregrine Financial Group Inc., 12-cv-05383, U.S. District Court, Northern District of Illinois (Chicago). The bankruptcy case is Peregrine Financial Group Inc., 12-27488, U.S. Bankruptcy Court, Northern District of Illinois (Chicago). The criminal case is U.S. v. Wasendorf, 12-mj-131, U.S. District Court, Northern District of Iowa (Cedar Rapids).
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