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Former CEO of Peregrine Financial Group Sentenced to 50 Years for Operating Sophisticated Fraud Scheme

(Source: FBI) - Russell R. Wasendorf, Sr., age 64, from Cedar Falls, Iowa, who stole more than $215,000,000 in customer funds from his commodity futures business, was sentenced today to 50 years in federal prison. Wasendorf received the prison term after a September 17, 2012 guilty plea to one count each of:

– mail fraud
– embezzlement of customer funds by a person registered under the Commodity Exchange Act
– making false statements to the Commodity Futures Trading Commission
– making false statements to a futures association registered under the Commodity Exchange Act

Wasendorf was the owner and former chief executive officer of the now-bankrupt Peregrine Financial Group Inc. (PFG), a futures commission merchant headquartered in Cedar Falls, Iowa.

In a plea agreement, Wasendorf admitted that, from about the early 1990s through about July of 2012, he stole millions of dollars from PFG’s customers. Wasendorf admitted he stole the funds, at least in part, by withdrawing money secretly from a customer segregated bank account and then by omitting the withdrawals from and inflating the balances on forged bank statements purportedly issued by the bank. Wasendorf admitted that the forged bank statements overstated the amount of customer funds in the account by more than $200 million. Wasendorf admitted he prevented regulators from discovering his crimes by submitting false periodic reports and forged bank account verification forms to the National Futures Association and the Commodity Futures Trading Commission.

Also in the plea agreement, Wasendorf admitted establishing a post office box to intercept paperwork sent by regulators and intended for U.S. Bank. Wasendorf included the post office box number on forged bank statements so that auditors and regulators would think the box belonged to the bank.

According to information disclosed at the sentencing hearing, Wasendorf stole more than $215,000,000 from more than 13,000 victims over the course of nearly 20 years. A bankruptcy trustee and a court-appointed receiver have been gathering known assets for distribution to creditors, including PFG’s commodities futures account holders.

Wasendorf was sentenced in Cedar Rapids by United States District Court Chief Judge Linda R. Reade. Wasendorf was sentenced to 50 years’ imprisonment—the maximum sentenced allowed by law for his offenses of conviction. He must also serve a three-year term of supervised release after the prison term. There is no parole in the federal system. The court imposed a judgment of forfeiture in the amount of $100 million and ordered Wasendorf to make $215,530,041.39 in restitution to more than 13,000 victims. As part of the plea agreement, Wasendorf agreed that any proceeds from any publicity about his crimes would be assigned to the United States and applied toward his restitution.

“By lying to investors and regulators, Wasendorf defrauded thousands of innocent investors out of a staggering $215,000,000,” said Acting United States Attorney Sean R. Berry. “The lengthy prison sentence imposed today is just punishment for a con man who built a business on smoke and mirrors.”

Thomas R. Metz, Special Agent in Charge of the Omaha Division of the Federal Bureau of Investigation, said, “Today’s sentence demonstrates this agency’s commitment to holding accountable those who prey on unwary investors and lie to those regulatory agencies responsible for protecting the integrity of U.S. financial markets.”

Wasendorf is being held in the United States Marshals custody until he can be transported to a federal prison.

The case was prosecuted by Assistant United States Attorneys Peter Deegan and Matthew Cole and was investigated by the Federal Bureau of Investigation with the assistance of the Blackhawk County Sheriff’s Office and the United States Postal Inspection Service.

Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.

The case file number is 12-CR-2021 LRR.


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