Peregrine CEO Wasendorf Pleads Guilty To $100 Million Fraud

Russell Wasendorf Sr fraud Peregrine Financial

By Tom Polansek and Ryan Schlader

Peregrine Financial Group's former Chief Executive Russell Wasendorf Sr. pleaded guilty on Monday to embezzling more than $100 million from customers of his futures brokerage, lying to regulators to cover his tracks, and mail fraud.

Previously expected to be set free from jail pending his sentencing, Wasendorf was told that he will remain behind bars while a judge determines whether he is a flight risk.

Wasendorf agreed earlier this month to plead guilty after confessing in July to stealing from his 24,000 customer base for nearly 20 years. It was quite a come down for the 64-year-old, who had once been regarded as a "noble figure," a generous philanthropist who supported many institutions, according to the BBC.

In a small courtroom in Cedar Rapids, Iowa, Magistrate Judge Jon Scoles confirmed that Wasendorf wanted to plead guilty to each of four charges.

"Are you pleading guilty because you are guilty?" Scoles asked the former futures-industry executive, who was wearing an orange prison jumpsuit and shackled at the wrists and ankles.

"Yes, your honor," Wasendorf replied.

Prosecutors said in court that Wasendorf, who faces up to 50 years in prison, should spend the rest of his life behind bars. Wasendorf's public defender argued for a sentence of about 24 to 30 years, which could be a life sentence given his age.

A date for his sentencing was not set.

Locked Up

Wasendorf attempted to kill himself on July 9 near the headquarters of his Cedar Falls, Iowa, brokerage. He was arrested on July 13 and charged with 31 counts of lying to federal regulators.

The search continues for the money he stole. Former clients are still unable to access funds frozen since the firm's bankruptcy on July 10.

Wasendorf previously was expected to be released from the Linn County Jail in Iowa, where he has been held in isolation and under suicide watch since his arrest, after he pleaded guilty on Monday.

In approving the release last week, Scoles said Wasendorf's chances to flee were limited because he had surrendered his passport and assets to authorities.

However, prosecutors on Monday objected to the plan and Chief Judge Linda Reade of the U.S. District Court of the Northern District of Iowa ruled that Wasendorf "shall remain detained pending further order of the court," according to a court filing.

A date for the next order was not released.

The public defender representing Wasendorf has declined to comment.

Prosecutors argued that Wasendorf should stay behind bars because there is a "serious risk" he might flee.

"Defendant's crime is nothing short of breathtaking," prosecutors said in a court filing.

More: Read This Before You Sign That Severance Agreement

Hidden Assets?

The total amount Wasendorf stole is not clear.

Prosecutors said Wasendorf stole about $200 million and that they were worried that he could access assets that may be hidden from authorities.

"If even the smallest portion of such a vast amount of money were hidden away, it could be all (the) incentive and means that defendant might need to flee a probable life sentence," prosecutors said in a filing.

The Commodity Futures Trading Commission has filed a lawsuit against Wasendorf and his firm, saying the CEO misappropriated more than $200 million in customer funds over several years.

Wasendorf claimed he acted alone in the fraud.

However, a civil lawsuit filed on Friday by the CEO's son, who was Peregrine's president, said Wasendorf had help from a woman who claimed to work for U.S. Bank, which held the account from which the elder Wasendorf stole. The woman told regulators in 2011 to disregard account balances that had been supplied directly by the bank in favor of inflated figures, supplied unbeknownst to them by Wasendorf, according to the lawsuit.

U.S. Bank said the lawsuit has no merit.

Wasendorf has met with authorities working to piece together his crime and track down his assets. Prosecutors said in a filing that his cooperation was "primarily designed to bolster his argument for release."

Wasendorf was set to move in with Linda Livingston, a pastor in Iowa who has counseled him in prison, if he was released. She attended the court hearing on Monday but did not speak to reporters.

Wasendorf has told authorities he is no longer suicidal.

Prosecutors said in a filing that "none of what defendant says can be taken at face value."

AOL Jobs contributed to this report.

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He does not have to worry about long term care insurance. Some of his former customers do. Screwed again?

September 19 2012 at 4:29 PM Report abuse rate up rate down Reply

I wonder if he complained about his tax rate??

September 19 2012 at 3:51 PM Report abuse rate up rate down Reply
Rhuss Tee

Hmmm! And we're still hating each other because of race! Seems like certain of us are fighting the wrong war!

September 19 2012 at 3:38 PM Report abuse rate up rate down Reply

I wonder if this rich theif is a backer for ROMNEY, it kind of makes you wonder. They probable have the same accounts in sweden, camen islands and the other so called tax havens.

September 19 2012 at 2:44 PM Report abuse rate up rate down Reply
1 reply to susie's comment

Can't spell?

September 19 2012 at 4:29 PM Report abuse rate up rate down Reply

Put this theif in jail for the rest of his life with no getting out. This is just another rich monster stealing from people they think their smarter, better and privilleged. He'll leave the country if he's let out on bail, and his money , homes, cars, anything of value should be sold and the money returned to the rightful people.

September 19 2012 at 2:41 PM Report abuse rate up rate down Reply

I think this is just the tip of the Iceburg. Many more like him still out there. All these people should be made an example of and all go to prision for life at Hard Labor. Just think of all the hard earned money that was invested and taken by this thief. Also just think of the $ TRILLIONS OF DOLLARS that was stolen by our Own Goverment. BOTH SIDES. They all should be arrested and go to PRISION @ HARD LABOR for LIFE.
BOB !~ !~

September 19 2012 at 11:45 AM Report abuse +1 rate up rate down Reply

As soon as ROMNEY is elected he will get a presidential pardon and be praised as the other 53% that pays taxes and deserves a chance to gain wealth...WE DONT NEED GOVERNMENT INTERVENTION, LET FREE MARKET AND THOSE ENTREPREANURS THAT ARE EAGER ENOUGH TO PURSUIT THEIR AMBITIONS AND DREAMS...

September 19 2012 at 10:40 AM Report abuse -1 rate up rate down Reply

He has a public defender.

September 19 2012 at 9:50 AM Report abuse rate up rate down Reply
rebecca jean

just 100 million........boy there sure are lots of thugs out there who just think they can take other peoples money.................

September 19 2012 at 7:29 AM Report abuse rate up rate down Reply

Just another greedy rich bastard. He isn't the only one. He just got caught.

September 19 2012 at 6:49 AM Report abuse +2 rate up rate down Reply

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