Peregrine CEO Wasendorf’s Bail Hearing Moved to July 27
Peregrine Financial Group Inc. founder Russell Wasendorf Sr.’s bail hearing was postponed to July 27 after he asked for more preparation time.
Wasendorf, who is accused of lying to federal regulators about how much client money the commodities broker had on deposit, noted he was assigned an attorney only yesterday, according to an order today by U.S. Magistrate Judge Jon Stuart Scoles in Cedar Rapids, Iowa.
Wasendorf, 64, admitted stealing at least $100 million from the Cedar Falls, Iowa-based firm, according to an FBI affidavit accompanying a criminal complaint unsealed on his July 13 arrest. He was to appear before Scoles for consideration of his release on bail and for a preliminary hearing. He has been in custody since his arrest.
A federal judge in Chicago last week froze assets belonging to Peregrine and Wasendorf, who was its chief executive officer, at the request of the U.S. Commodity Futures Trading Commission. The CFTC has sued accusing him and his firm of misappropriating client finds.
Scoles yesterday appointed Jane Kelly, federal public defender, as counsel for the CEO. Kelly made the postponement request today.
Kelly did not return a call seeking comment on the delay. Prosecutors didn’t object, according to her court filing. Wade Kisner, a spokesman for the U.S. Attorney’s Office in Cedar Rapids, didn’t return a call for comment on the ruling.
Missing $200 Million
The National Futures Association on July 9 reported that Peregrine appeared to be missing at least $200 million in client funds. Wasendorf attempted suicide outside the company’s headquarters that day.
Wasendorf established Wasendorf & Son Inc. in 1980, renamed it Peregrine 10 years later and opened a Chicago office, according to the company website. It filed for Chapter 7 bankruptcy protection in Chicago on July 10.
Before trying to asphyxiate himself on the day of the NFA report, Wasendorf prepared a statement saying he had been embezzling from the company for nearly two decades, according to the affidavit of a Federal Bureau of Investigation agent, William Langdon, filed with the criminal complaint.
“I have committed fraud,” Wasendorf wrote, according to Langdon. “For this I feel constant and intense guilt,”
The NFA and CFTC say at least $200 million in client funds are missing from the firm’s accounts at U.S. Bank.
A client, Michael LaSalvia of Naperville, Illinois, on July 13 sued Wasendorf; his son and chief operating officer, Russell Wasendorf Jr.; and two other Peregrine executives, accusing them of commingling firm and client funds in violation of the U.S. Commodity Exchange Act.
Beau Wolinsky of Danville, Kentucky, another client, sued yesterday accusing those defendants and firm Vice Chairman Neil Aslin of breaching separate CEA provisions prohibiting fraudulent dealings.
Wolinsky and LaSalvia asked for class-action, or group, status on behalf of all similarly situated clients from February 2010 to July 2012. They asked for unspecified money damages.
The trustee liquidating Peregrine, who is seeking to return “specifically identifiable property” to customers, said only about 11 of 24,000 futures clients have such property eligible to be returned, according to a filing in bankruptcy court.
The trustee, Ira Bodenstein, said the assets he is trying to return are defined as securities, warehouse receipts, cash and other assets that are registered in the name of that customer and are not transferable. The 11 eligible customers are mostly holding warehouse receipts for precious metals, he said.
Russell Wasendorf Jr. and Neil Aslin couldn’t be located to ask for comment.
The criminal case is U.S. v. Wasendorf, 12-mj-00131, U.S. District Court, Northern District of Iowa (Cedar Rapids).
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 Illinois (Chicago).
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