Jan. 23 (Bloomberg) -- Russell Wasendorf Sr., the founder of now-bankrupt Peregrine Financial Group Inc., stole more than $215 million from the commodity firm’s customers, U.S. prosecutors said.
Wasendorf, then 64, pleaded guilty in September in federal court in Cedar Rapids, Iowa, to mail fraud and two counts of lying to federal prosecutors. He faces as long as 50 years in prison at his Jan. 31 sentencing.
“Defendant claims the loss is less than $200 million,” Acting Iowa U.S. Attorney Sean Berry said in a sentencing memorandum filed yesterday in federal court in Cedar Rapids. “The actual loss in this case can be determined with remarkable precision.”
Wasendorf’s crimes came to light on July 9 when he tried to kill himself by piping auto exhaust into the passenger compartment of his car outside the firm’s Cedar Falls, Iowa, headquarters. In a written statement, Wasendorf, who was also Peregrine’s chairman and chief executive officer, said he had been stealing from the company for almost 20 years.
The National Futures Association, an industry self-regulator, announced the same day as the suicide attempt that about $200 million in customer funds the firm reported was on deposit at its bank were unaccounted for.
According to his plea agreement, Wasendorf started stealing from Peregrine in the early 1990s, covering his theft by altering statements from the company’s bank and passing them to his chief financial officer and accountants.
“Defendant used the stolen money to unlawfully bolster the apparent financial position of PFG, fund defendant’s outside business interests, and for defendant’s own personal use and purposes,” according to the plea document.
The case is U.S. v. Wasendorf, 12-cr-2021, 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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