Wasendorf Dream Building Languishes After Peregrine Fall

Wasendorf Dream Building Languishes After Collapse
Finding a buyer for the Peregrine Financial Group Inc. building will be a challenge in a small market that already has several office properties for sale. Photographer: Justin Torner/Bloomberg

Russell Wasendorf Sr. gave Cedar Falls, Iowa, a boost in 2009 when he moved his futures brokerage to a wooded area of town. The firm’s collapse, after he confessed to pilfering at least $100 million, may leave the state-of-the-art headquarters he built languishing for years.

The building is almost empty and may eventually be on the block as Peregrine Financial Group Inc. is liquidated. Finding a buyer will be a challenge in a small market that already has several office properties for sale, said Jim Benda, a broker at Cedar Falls-based Lockard Commercial Realty.

“That property could be vacant for five years,” he said in a telephone interview. “It’s going to be a difficult sale,” especially because it’s the only office building for about 5 miles (8 kilometers), he said.

Wasendorf, who attended the University of Northern Iowa in Cedar Falls, wanted a building designed from the ground up for Peregrine. Floor-to-ceiling windows and energy-efficient lighting were designed to minimize the effect on the once-pristine surroundings. The gym, day-care center and cafeteria were free and available to the entire staff.

“I felt the employees would be proud of it,” Wasendorf, the firm’s founder and chief executive officer, said on the video celebrating the opening of the $24 million property.

Rolling Slopes

The Cedar Valley -- which includes Cedar Falls, with a population of about 39,000, and neighboring Waterloo, with 68,000 people -- has about five years of supply of empty office space, Benda said. Peregrine’s collapse will dump an additional 50,000 square feet (4,600 square meters) on the market in the region, more known for its rolling slopes and hiking trails along the Cedar River than its Fortune 500 companies.

Peregrine moved to the area from Chicago, a five-hour drive east and the Midwest’s traditional financial center.

“I was struck by the fact several years ago, that even though there’s a lot of very high-powered financial firms in the world, there’s very few of them that actually have their own building, that have created a structure specifically for what they do,” Wasendorf said in the video for the September 2009 opening.

The firm, founded in 1990, had evolved into an Internet-based brokerage that needed a workplace with power and technology “accessible in every square meter of the building,” said Wasendorf. The first person he hired for the project was a biologist, to ensure the construction wouldn’t disturb virgin woodlands or any endangered species inhabiting the area.

‘Exciting’ Move

“To bring a business like that to the Cedar Valley was exciting,” said Dave Peters, president of Waterloo-based Peters Construction Corp., the general contractor for the project.

Companies based in the area include tractor manufacturer Deere & Co., with 6,000 workers in Waterloo, and Tyson Foods Inc., with 2,600 employees, according to Deere and the Greater Cedar Valley Alliance & Chamber.

Most Cedar Valley businesses are much smaller and wouldn’t need all the space at One Peregrine Way, according to Benda. A single company that would make the building its new home probably would have to come from outside the area, he said.

“We don’t have the employers,” Benda said. “We don’t get office jobs like that.”

About 250 people were employed by Wasendorf at Peregrine and other related businesses in Iowa, including the myVerona restaurant on Main Street in Cedar Falls, according to Kerry Koonce, a spokeswoman for Iowa Workforce Development, a Des Moines-based state agency.

‘Magnificent’ Property

The “magnificent” headquarters will compete for buyers with properties including the former Cedar Falls offices of Principal Financial Group Inc., said Matt Miehe, a broker at Sulentic-Fischels Commercial Group in Waterloo. The 67,000-square-foot building, which until last month was entirely leased by the Des Moines-based insurance and asset-management firm, has been on the market since July 2011 and is listed for $8.3 million, he said.

Wasendorf Construction LLC, of which Wasendorf and his son Russell Jr. are listed among the members, owns Peregrine’s headquarters, according to a $6.4 million mortgage held by U.S. Bank and the Black Hawk County assessor.

A federal court-appointed receiver and the bankruptcy trustee are collaborating on a plan to dispose of Wasendorf’s assets, said Randy Lending, the Chicago-based attorney for the receiver, Michael Eidelman. The receiver is working with the parties involved to get the highest price for the real estate, he said.

There has been interest in the property, Lending said, declining to elaborate.

Suicide Note

The building and 20 acres (8 hectares) of surrounding land were valued at about $16 million for the 2012 tax year, according to the county assessor. The balance on the U.S. Bank loan is $5.9 million, said Tom Joyce, a spokesman for U.S. Bancorp, the Minneapolis-based parent.

Two voice mail messages left for Nicholas Iavarone, a Chicago attorney for Russell Wasendorf Jr., weren’t returned.

On July 9, Peregrine’s CEO parked outside his office and tried to asphyxiate himself, running a hose from his car’s exhaust pipe into the passenger compartment. Wasendorf, 64, was found with a suicide note and a signed statement confessing to more than 20 years of fraud, according to an affidavit by Special Agent William Langdon of the Federal Bureau of Investigation.

Peregrine filed for U.S. Bankruptcy Court liquidation in Chicago on the following day, hours after the U.S. Commodity Futures Trading Commission submitted a lawsuit accusing the brokerage and Wasendorf of misappropriating client funds. He has been charged with making false statements to federal regulators and is in federal custody.

Secluded Location

One Peregrine Way would be a good fit for a technology or financial-services company that “doesn’t need visibility as a part of their business,” said Steven Dust, CEO of the Greater Cedar Valley Alliance & Chamber.

Chris Fischels, a senior vice president at Sulentic-Fischels, said he envisions a firm moving in and creating jobs in the area. The headquarters could be marketed as a high-technology building “nestled back in a great location,” he said.

It’s that solitude that will discourage many potential buyers, said Benda, the Lockard Commercial broker.

The property is near a private golf club “and that’s about it,” he said. “If you’re looking for seclusion and peace and quiet and nature, this is it. If you’re looking for convenience to restaurants and services, then this is not it.”

Recruiting a company from outside the region won’t be accomplished quickly, according to Benda.

‘Good Thing’

Wasendorf “was doing a good thing for the environment, for the piece of ground, for the community,” Benda said. “They were trying to make an impact. It’s just sad it all went in the wrong direction.”

The bankruptcy case is Peregrine Financial Group Inc., 12-27488, U.S. Bankruptcy Court, Northern District of Illinois (Chicago). The CFTC regulatory case is U.S. Commodity Futures Trading Commission v. Peregrine Financial Group Inc., 12-cv-5383, U.S. District Court, Northern District of Illinois (Chicago). The criminal case is U.S. v. Wasendorf, 12-mj-00131, U.S. District Court, Northern District of Iowa (Cedar Rapids).

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