Sept. 17 (Bloomberg) -- Russell Wasendorf Sr., founder of the bankrupt commodities firm Peregrine Financial Group Inc., will remain in custody after his planned guilty plea to stealing more than $100 million from customers, a federal judge said in postponing another judge’s order.
U.S. District Judge Linda Reade today postponed Wasendorf’s release following the government’s opposition.
Wasendorf, 64, is set to appear in federal court this afternoon in Cedar Rapids, Iowa, to enter his plea.
“Defendant shall remain detained pending further order of the court,” Reade said.
U.S. Magistrate Judge Jon Scoles last week ruled that Wasendorf could remain free on bail after his plea and live with his friend and pastor, Linda Livingston, who volunteered to supervise him while he awaits sentencing. Wasendorf would also be required to wear an electronic monitoring device.
“There is at least a ‘serious risk’ defendant might choose to flee rather than face the consequences of his offenses,” Assistant U.S. Attorney Peter Deegan wrote in his motion. “Anytime a defendant is facing a substantial likelihood of spending the rest of their life in jail, that risk should be regarded as serious. This is especially so where a person has stolen more than $100 million and nearly all of the money is unaccounted for.”
Wasendorf’s plea agreement calls for a prison sentence of as long as 50 years. While he consented to entry of the plea before Scoles, the accord needs Reade’s approval.
Wasendorf’s crimes came to light on July 9 when the National Futures Association, an industry self-regulator, announced that about $200 million in customer funds the firm reported was on deposit at its bank was unaccounted for.
The case is U.S. v. Wasendorf, 12-cr-2012, U.S. District Court, Northern District of Iowa (Cedar Rapids).
The bankruptcy case is In re Peregrine Financial Group Inc., 12-27488, U.S. Bankruptcy Court, Northern District of Illinois (Chicago). The regulatory case is Commodity Futures Trading Commission v. Peregrine Financial Group Inc., 12-cv-5383, U.S. District Court, Northern District of Illinois (Chicago).
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