July 17 (Bloomberg) -- Russell Wasendorf Sr., the Peregrine Financial Group Inc. executive charged with lying to federal regulators, counted Romanian properties, a restaurant and an online bookstore among the entities he controlled, a court-appointed receiver told a U.S. judge.
Receiver Michael Eidelman and his lawyer, Randall Lending, told U.S. District Judge Rebecca Pallmeyer about those holdings and others today as they asked her to modify the July 10 receivership order she signed shortly before Peregrine filed for bankruptcy court protection.
“There’s quite a bit of work to do here,” said Lending, who obtained court approval for an expanded budget and for the retention of his firm, Vedder Price PC, as Eidelman’s counsel.
Wasendorf, 64, is accused of lying to the U.S. Commodity Futures Trading Commission about the amount of client funds the Cedar Falls, Iowa-based commodities brokerage had on deposit at U.S. Bank. He is in federal custody pending the outcome of a bail hearing at a U.S. court in Cedar Rapids, Iowa, tomorrow.
The National Futures Association on July 9 announced at least $200 million in Peregrine client funds were unaccounted for. Wasendorf, the firm’s founder and chief executive officer, tried to kill himself the same day.
The CFTC accused Wasendorf and the firm of misappropriating client funds in a July 10 federal lawsuit filed in Chicago, where Peregrine has offices.
While Pallmeyer appointed Eidelman as receiver for Wasendorf and his company that day, a separate trusteeship over the brokerage was established in the bankruptcy court proceeding.
Eidelman, through Lending, filed papers yesterday asking Pallmeyer to amend her order to account for Chapter 7 Trustee Ira Bodenstein’s responsibility for the Peregrine Financial bankruptcy estate.
Preliminary review of Wasendorf’s holdings revealed a construction company, a publishing company, two Chicago condominiums and aircraft, according to that filing.
“It is possible assets owned by the Wasendorf entities may have been procured with funds embezzled from PFG,” Lending and Eidelman said in their court papers.
Eidelman also told the court he’d reached an agreement with U.S. Bank that caps liability for a credit rate swap in which the bank and a Wasendorf-controlled entity were counter-parties, at $770,000.
Wasendorf has admitted stealing at least $100 million from the firm, according to the affidavit of Federal Bureau of Investigation Special Agent William Langdon, filed with the criminal complaint.
In a signed statement found with Wasendorf as he tried to commit suicide by asphyxiation outside Peregrine’s Cedar Falls offices, the CEO said he’d been embezzling from his clients for nearly 20 years, Langdon’s affidavit said.
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 In re Peregrine Financial Group Inc., 12-27488, U.S. Bankruptcy Court, Northern District of
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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