Peregrine boss jailed 50 years for embezzlement
Russell Wasendorf stole more than $215M from customers
Russell Wasendorf Sr., the founder of now-bankrupt commodities firm Peregrine Financial Group Inc., was sentenced to 50 years in prison for what prosecutors said was a theft of more than $215 million US from customers.
Wasendorf was sentenced Thursday in federal court in Cedar Rapids, Iowa, The Associated Press reported. He used a printer, software and a post office box in a scheme to create false bank statements and other documents and hide from regulators and auditors that he embezzled customer funds over a 20-year period starting in the early 1990s, prosecutors said in court filings.
Assistant U.S. Attorney Peter Deegan told U.S. District Judge Linda Reade in court filings that Wasendorf deserved the maximum 50-year penalty because of the amount customers lost and the sophistication used to carry out the crime. Wasendorf started stealing within two years of Peregrine’s original financing, using a copy machine to hide the fact he had stolen $250,000 to keep his company afloat.
“Defendant’s entire business was used as a mechanism to gather and purloin investor funds,” Deegan said. “From that point on, as defendant well knew, PFG was never profitable.”
Wasendorf, a former trader, started Peregrine as a one-man firm in the basement of his home and eventually expanded the brokerage to include 241 employees.
He pleaded guilty in September to mail fraud and two counts of lying to federal prosecutors. Prosecutors were also scheduled to ask Reade to order Wasendorf to repay money he stole from more than 10,000 victims.
Peregrine was a futures and options commodities firm that used customer money and securities to secure their trades. Beginning in the early 1990s, Wasendorf embezzled customer funds and used the money to bolster Peregrine’s financial position, fund outside businesses and for personal use, including a lavish headquarters, a corporate jet and his personal business interests in Romania, prosecutors said in court filings.
He fabricated large deposits and eliminated deductions he made from the account, prosecutors said in court filings. He established company rules mandating that he was the only one to examine company bank statements, they said.
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, said he had been stealing from the company for almost 20 years.
The National Futures Association, an industry self-regulator, announced the day of the suicide attempt that about $200 million in customer funds the firm reported was on deposit at its bank were unaccounted for. Peregrine filed for bankruptcy court liquidation in July.
Wasendorf told federal agents “he always knew that it would catch up to him,” Jane Kelly, an attorney who represents Wasendorf, said in a court filing.