Wasendorf Receiver Gains Right to Cash in Life Insurance
Russell Wasendorf Sr.’s court- appointed receiver won permission from a federal judge to begin liquidating the Peregrine Financial Group Inc. founder’s assets, starting with a life insurance policy and a jet plane.
U.S. District Judge Rebecca Pallmeyer in Chicago granted receiver Michael Eidelman’s request after a hearing today. Eidelman was appointed last month after the federal Commodity Futures Trading Commission sued Wasendorf and his commodities firm for allegedly misappropriating more than $200 million in client money.
The universal life insurance policy, obtained in 2004, has a cash surrender value of almost $1.3 million, Eidelman’s attorney, Randall Lending, told the judge. Wasendorf’s Hawker Beechcraft Inc. 400A jet, though valued at about $3.2 million, is encumbered by a $4.3 million Cesna Finance Corp. lien.
The plane will probably be surrendered to Cesna Finance or to Family Air LLC, Lending said in court papers. Lending told the judge there may be a looming dispute between the receiver and a Chapter 7 bankruptcy trustee appointed to liquidate Peregrine over the fate of the insurance proceeds because that policy may have been bought with Peregrine money.
“We will deal with that issue later,” Lending said.
Lawyers for bankruptcy trustee Ira Bodenstein today asked Pallmeyer for permission to intervene in the CFTC case. She directed them to file a formal request within seven days.
Outside the courtroom, Bodenstein’s attorney, Robert Fishman, told reporters the trustee and receivership were working together to avoid conflicts.
“It’s complicated,” he said of the simultaneous efforts to liquidatate assets belonging to Wasendorf and his firm to pay their respective creditors. “We’re going to do our best to make it as efficient as we can.”
Peregrine filed for bankruptcy on July 10, hours after the CFTC filed its lawsuit. The Cedar Falls, Iowa-based firm listed more than $500 million in assets and more than $100 million in liabilities.
Wasendorf has been charged with lying to U.S. regulators and is in federal custody.
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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